The discovery of larger commercial quantities of oil and gas in deepwater offshore Ghana has exposed the inadequacies in the current legal and regulatory framework governing the industry, a representative of the Ministry of Energy, Mrs Anita Lokko, has said.
Mrs Lokko said to adequately protect the interest of Ghana and to ensure that maximum benefits were derived for the people of Ghana, the framework of the law needed to be strengthened.
She said the passage of the Petroleum Revenue Management Act, 2011 (Act 815), Petroleum Commission Act, 2011 (Act 821) which established the Petroleum Commission, Petroleum (Local Content and Local Participation) Regulations, 2013, (LI 2204) and the Petroleum (Exploration and Production) Bill, 2013 to replace PNDCL 84 were some of the steps taken by government to replace the legal regime governing the petroleum industry.
She was speaking at a multi-stakeholder forum on open contracting processes in the Petroleum (Exploration and Production) Bill, 2013 in Accra on Wednesday.
The forum was organized by the Africa Centre for Energy Policy (ACEP), with support from the UK Department for International Development (DfID) and UK aid.
Mrs Lokko explained that the overarching principle which formed the bedrock of the proposed Exploration and Production Bill was to ensure that petroleum resources were managed and exploited for the optimal benefit and welfare of the Ghanaian people, in a safe, secure and sustainable manner, and conducted in accordance with international best practice within the petroleum industry.
In addition to this, she said, the Bill sought to provide transparency and certainty, in order to attract private investment into the sector.
She cited Section 92 (l) of the Bill which empowers the Minister to, by Legislative Instrument, develop regulations on procedures and conditions for the granting of petroleum agreements, including qualification requirements, terms and conditions for open and competitive tendering procedures, and direct negotiations.
She disclosed that the development of these regulations had commenced with the drafting of Regulations on Fiscal Metering, Data Management, Health, Safety and Environment, and Drilling and Reservoir Management.
In a presentation, Dr Mohammed Amin Adam, Executive Director of ACEP, described the new Exploration and Production Bill as much progressive as it attempted to meet some open contracting processes such as mandatory disclosure of contracts and an open bidding process.
Dr Adam said in spite of the progress made, the new Bill was undermined by the process for direct negotiation while significant gaps remained in it.
These gaps, he said, included the absence of any requirement for the publication of justification of an award and other relevant technical and financial requirements that formed the basis for the award; lack of any requirement for the disclosure of beneficial owners in oil deals; extensive confidentiality clauses in all petroleum contracts and the absence of any requirement for public comments on Contracts, unlike the legislative process.
He said unlike those of Sierra Leone, Angola, Brazil and Kenya, Ghana’s legal regime on open contracting did not provide transparency and fell short of open contracting standards such that no open tendering process were employed for oil blocks and companies, and individuals awarded licenses through an administrative process (open door policy) while bid evaluations were neither published, nor reasons provided for choosing one bid against others.