The long-in-the-works Petroleum Exploration and Production (E&P) Bill, last Thursday, went through second reading in parliament, with its passage expected in the coming weeks.
Members of the house unanimously praised the thoroughness of work done on the bill which has gone through series of revisions since it was first drafted in 2010 and laid before parliament on November 11, 2014.
According to a report of the select Committee on Mines and Energy, the bill represents a “significant improvement” over PNDC Law 84, under which licences are currently granted.
It, for example, increases the country’s minimum carried interest in every petroleum agreement from the current 10% to 15%.
Unlike the current situation where petroleum rights are granted companies through direct negotiations, the bill provides for competitive tendering, which civil society actors like the African Centre for Energy Policy and the Civil Society Platform on Oil and Gas have long called for.
The bill, however, allows the Petroleum Minister to undertake direct negotiations under two circumstances. The first is where an area offered for a public tender does not become subject to a petroleum agreement. The second is where the Minster, in consultation with Petroleum Commission, determines that direct negotiations would ensure the most efficient and optimal exploitation of petroleum in a particular area” the report noted.
To regulate the exercise of the discretion, the bill requires the Minister in such circumstances to publish the invitation to tender or the invitation for direct negotiations in the Gazette and in at least two state owned newspapers and other media for the attention of the general public.
Again, where the Minister receives more than one expression of interests after the publication, a public competitive tendering process would have to be followed.
Additionally, under the provisions for the making of regulations in the report- the Minister would be empowered to make Regulations to provide detailed procedures for the grant of Petroleum Agreements, conditions for the competitive tendering process and direct negotiations, safety and security issues.
It is these rights that a Member of the Mines and Energy Committee, Isaac Asiamah is questioning, maintaining that it does not promote transparency in the whole process.
He said: “We need to ensure that there is transparency and accountability in the legal regime that ensures that there is fairness in the industry- if it becomes like the old one then it becomes a waste of time. The bill giving powers to the Minister to negotiate and abrogate agreement is not the best. Discretionary powers given to Minister should be removed and make way for competitive bidding”.
“The Minister alone cannot look at the financial capabilities of a company. That is why we have the procurement law. It should be opened it up. If we are not careful all sort of corruption will be going on there because it is about selling our oil blocks. Therefore, a Minister may decide that this is a juicy area and I am not going to open it up for competitive tendering- The Minister can invoke the law and give it to the company of his choice. This is a disaster,” he added.
However, the Vice Chairman of the Mines and Energy Committee, Adams Muthawakilu, disagreed, saying: “If it is only one person who bided for it then it becomes direct negotiations and in that case the Minister will engage, having in mind what the country will gain. It provides for competitive bidding; if they are more than one biding company, the competitive tender will go through.”
The object of the Bill, the committee’s report noted, is to provide for and ensure safe, secure, sustainable and efficient petroleum activities in order to achieve optimal long-term petroleum resource exploitation and utilization for the benefit and welfare of the people of Ghana.