Even though the Petroleum (Exploration and Production) Law, 1984, Provisional National Defence Council Law 84 (PNDCL 84) requires the development of Regulations for competitive bidding in the award of contracts for oil blocks, no such Regulations have been passed to date.
Again, even though the Petroleum Exploration and Production Bill is yet to be passed into Law, new contracts are being awarded under the old law– which is considered deficient and outmoded–to the detriment of Ghana’s interests in the oil and gas industry.
The Executive Director of the Africa Centre for Energy Policy (ACEP), Dr Mohamed Amin Adam, expressed these concerns when presenting a paper at a workshop in Accra on Thursday.
The two-day training workshop formed part of a STAR-Ghana-sponsored project titled “Evidence-Based Advocacy on Implementation of the National Anti-Corruption Action Plan (NACAP) in the Oil and Gas Sector.”
It was organised by ACEP on the theme: ‘Combating corruption in the oil and gas sector in Ghana.’
The objective of the workshop was to support capacity development in anti-corruption agencies and empower them to identify and check abuses in the oil and gas industry. It was also in response to the National Anti-Corruption Action Plan which recommends capacity development in state agencies responsible for checking corruption.
The training covered fundamentals of the oil and gas industry, processes for awarding petroleum contracts and analysis of contractual obligations.
In attendance were representatives from select anti-corruption agencies in Ghana, including the Commission on Human Rights and Administrative Justice (CHRAJ), the Ghana Police Service (GPS), the Financial Intelligence Unit (FIU), the Economic and Organised Crime Office (EOCO), the Auditor-General’s Department, Ghana Integrity Initiative (GII), Ghana Anti-corruption Coalition (GACC), Judicial Service of Ghana, Ghana Centre for Democratic Development (CDD-Ghana) and the Media.
Dr Adam said it was unfortunate that in the absence of the relevant Regulations and Laws, oil blocks were being given out in contracts, pointing out that the development smacked of corruption around oil contracts.
He said the finite nature of the oil resource demanded that corrupt practices in oil contracts were checked and not allow the elite to control the resource to the disadvantage of future generations and their right to benefit from the resource.
He said Regulation 4 of the Local Content Regulations L.I. 2204, which gave discretionary power to the Minister in the selection bid for oil contracts, was bound to engender abuse of the bidding and selection process.
Dr Adam also cited section 10 of the new Petroleum Exploration and Production Bill as being problematic.
He explained that although section 10 (1) of the Bill provided an antidote against corruption, section 10 (2) and (4) of the Bill removed that antidote by exempting the Minister from not giving reasons if he should decide to set aside open tender processes for secret negotiations.
Dr Adam said corruption in the oil and gas sector could lead to a resource curse and that to prevent that, contract disclosure and open contracting should be mandatory.
He mentioned pre-qualification, tender selection and award for concessions for exploration and production stages as well as the granting of licenses, during which the rules could be bent to favour preferred interests, as high risk areas for corruption.
He urged Non-Governmental Organisations in the oil and gas industry to sharpen their skills to be able to monitor, identify and expose corrupt practices in the industry, should the law be passed in its present form, i.e., without addressing the concerns associated with sections 10 (2) and (4) of the new Petroleum Exploration and Production Bill.
For his part, Mr Stephen Olson, Partner, Baker Hostetler LLP of Houston Texas, noted that even though corruption might not be completely eliminated in the oil and gas industry, steps could be taken to considerably minimise it.
Mr Olson called for the setting up of contract schemes that promoted transparency and allowed monitoring and tracking of resources.
In addition, he said, there was the need for training for persons who managed oil revenues, while regulatory schemes that provided for severe penalties as deterrent should be instituted.
In another presentation, Mr Timothy Scott Pfeifer, Partner, Baker Hostetler LLP, New York, U.S.A., referred to a statement by the United States Senate in 1977 that corporate bribery was bad business and fundamentally destructive of the basic tenet that the sale of products should take place on the basis of price, quality and service.
Mr Pfeifer said according to the Senate, foreign corporate bribery affected the very stability of overseas business as well as the domestic competitive climate when domestic firms engaged in such practices as a substitute for healthy competition for foreign business.
He said it was in response to revelations of widespread bribery of foreign officials by U.S. companies Congress enacted the U.S. Foreign Corrupt Practices Act (FCPA) in 1977.
FCPA, he said, was, therefore, intended to halt such corrupt practices, create a level-playing field for honest business and restore public confidence in the integrity of the marketplace.