TOP STORIES THIS MONTH
Atuabo Gas, Aboadze Thermal plants suffer from Jubilee gas cut
A suspension of operations at the Atuabo Gas Processing Plant, a US$50million spending on crude oil for power generation by the Volta River Authority (VRA), and a compounded power rationing programme highlighted July as Tullow oil was forced to carry out an unplanned shutdown of the FPSO Kwame Nkrumah.
Lead operator on the Jubilee Field, Tullow Oil plc, said in a statement that “Gas exports from the Jubilee Field to the Ghana Gas Plant at Atuabo have been suspended since July 3, 2015 due to technical issues with gas compression systems on the FPSO Kwame Nkrumah, and are expected to resume by mid- August.”
The FPSO shutdown has resulted in a cut in supply of gas from the jubilee field to the Atuabo Gas Processing Plant, which in turn has necessitated a cessation of gas supply to power generators like the Volta River Authority, which runs the Aboadze thermal plant.
The Aboadze and other thermal plants sited in the Western Region, which were hitherto running on cheap gas supplied by Ghana Gas Plant, are now operated with the more expensive crude oil.
Power producer VRA conservatively estimates that it requires about US$50million to power its thermal plants in the absence of gas every three weeks.
Ripples of deregulation
July has provided insights into the future of a deregulated downstream petroleum sector as prices have tossed up and down at the pumps of fuel stations following government’s decision to pursue petroleum price liberalization.
A nine percent increase in June was followed by a 15 percent rise at the start of July before prices dipped 15 percent. July closed with another marginal increment.
The price deregulation means intermittent increase in the prices of petroleum products would allow Oil Marketing Companies (OMCs) to fix the prices of products and help stop subsidizes under full petroleum price deregulation.
That notwithstanding, the determination of prices is still in the hands of the National Petroleum Authority (NPA).
But some media reports suggested discrepancies existed in the pricing of petroleum products by some OMCs, prompting questions about the pricing formula of the different OMCs and the capacity of the NPA to effectively regulate the OMCs.
Citi Business News, for instance, identified a 21-pesewa gap in the price of petrol per litre and an 18-pesewa gap in the price of Diesel per litre, when comparing the highest and least prices of the products on the market.
The Africa Centre for Energy Policy (ACEP) has also alleged that OMCs are already engaging in cartelization under the fuel price liberalization regime.
It therefore asked the NPA to allow OMCs to adjust their prices daily rather than the newly introduced weekly adjustments based on the exchange rate in order to help address the phenomenon of cartelization.
Six districts team up as Coastal Foundation
The districts immediately proximate to oil and gas production, traditionally called the six coastal districts, will now work together as the Western Region Coastal Foundation (WRCF).
This follows the launching of the WRCF in Takoradi at a ceremony attended by high ranking personalities, including Mr Jon Benjamin, British High Commissioner, Dr George Sipa Yankey, Chief Executive Officer (GEO) of Ghana National Gas Company, Osagyefo kwamina Enimil, President of the Regional House of Chiefs, Mr Paul Evans Aidoo, Western Regional Minister, and Awulae Attibrukusu, Paramount Chief of Lower Axim.
A consortium led by DAI received funds from the UK Government through the Department for International Development (DFID) to setup the WRCF. Primarily, WRCF will organize and support effective dialogue between the oil, gas and power companies (OGPs) communities and relevant stakeholders, including government agencies. The ultimate goal is to help maximize the impact of corporate social investment (CSI) fund in the six districts, namely Shama, Sekondi-Takoradi, Ahanta West, Nzema East, Ellembelle and Jomoro.
The formation of the WRCF has, meanwhile, been greeted with optimism. For instance, Mr Jon Benjamin said the WRCF was one way in which the government, private sector, traditional authorities and communities could collaborate effectively to ensure stability and inclusive growth.
Osagyefo Kwamina Enimil, President of the Regional House of Chiefs, also said he was particularly thrilled “that the portfolio of the Western Region Coastal Foundation includes a multi-stakeholder dialogue platform, which creates opportunities and gives voice to the people to express their concerns and anxieties about the activities and impact of oil and gas companies within their communities.”
Three concerns of Ghana’s mining sector
In a largely controversial month for the natural resource of Ghana, the mining sector was in the news for three major reasons, a claim of gold price manipulation, fears of further labour layoff and the expression of disappointment about the management of operations of illegal miners, popularly called galamsey.
The major concern has been over a Graphic Business report that the gold manipulation phenomenon has, as the principal accused manipulators of last resort, the gold establishment – central banks and governments supported by the bullion banks.
On the a more domestic issue, Chief Executive Officer of the Ghana Chamber of Mines, Mr Sulemana Koney, has expressed worry about the inability of the country to convert threats of illegal miners into opportunities so it can rake in some revenue.
But Mr Kone served more positive news when he said on a different occasion that laying-off workers now is not an option that has come up for discussion yet by any of the companies under the Chamber.
According to him, it is not an easy option to choose and that it is considered only if it is the last option that can solve their challenge.
PERSONALITY OF THE MONTH
Mark Evans is Africa Economic Analyst with the Natural Resource Governance Institute (NRGI). He provides technical assistance, research and capacity building activities to improve natural resource revenue management and fiscal policy across NRGI’s Sub-Saharan Africa portfolio.
Before joining NRGI, Mark was a Senior Policy Analyst with the Pacific Institute of Public Policy, where he provided analysis of fiscal policy issues facing Pacific island nations and technical support to the Government of Timor-Leste in the UN Open Working Group on Sustainable Development Goals. Prior to this, he worked as an ODI fellow in the Reserve Bank of Vanuatu, producing macroeconomic analysis and advice to the Monetary Policy Committee. He has also worked as an economist in the British Government.
Mark holds an economics degree from University College London (UCL) and a Masters in development economics from the School of Oriental and African Studies (SOAS).
CHANGE OF THE MONTH
Parliament amends Petroleum Revenue Management law
Ghana National Petroleum Company (GNPC) is set for life as a commercial entity and a strong operator in the oil and gas sector. Per its new status, GNPC can borrow on the strength of its own balance sheet without relying on central government guarantees.
However, the national oil company will no longer have the privilege of receiving petroleum revenues, deducting its share of the proceeds before depositing the remainder in the Petroleum Holding Fund.
This is one of the key changes in petroleum revenue management as Parliament passed the Petroleum Revenue Management (Amendment) Bill, 2015 into law.
The Bill generally amended the Petroleum Revenue Management Act, 2011 (Act 815), addressing irregularities and operational challenges in the management of revenue from the oil and gas sector.
Among other things, the amendment also provides for the allocation of Funds for the Ghana Infrastructure and Investment Funds (GIIF), as well as the the composition of the Investment Advisory Committee. Also, Section 48 of Act 815 as amended in the Bill requires the Minister of Finance to present a report to Parliament, describing the stage of implementation of the programmed activities funded by the expenditure incurred on the activities, covered by the Annual Budget Funding Amount, and to indicate the portion of the Annual Budget Funding Amount allocated to the Ghana Infrastructure Investment Fund.
WHAT’S COMING UP?
Venue: Kofi Annan Centre of Excellence in ICT, near Parliament House – Accra
Date: August 5, 2015.
Venue: Kofi Annan Peace Keeping Centre, Teshie
Date: August 9, 2015 – August 22, 2015.
Venue: Capital View Hotel, adjacent Koforidua Polytechnic – Koforidua
Date: September 18, 2015 – September 20, 2015
1st ECOWAS Mining & Petroleum Forum and Exhibition
Save the date for the first ECOWAS Mining & Petroleum Forum and Exhibition (ECOMOF), which is schedule for 6th to 8th, October in Ghana. This event would be organised by the ECOWAS Commission, in collaboration with the Government of Ghana and AME Trade Ltd.