The Institute of Public Policy Research, (IPPR) has called on government to ensure transparency in the bidding for the allocation of oil blocks in the petroleum upstream sector.
A statement from the Institute signed by its Executive Director Eugene Bawele,follows President Akufo-Addo, opening of a Competitive Tender to auction six out of nine prepared blocks in the Tano basin, offshore Cape Three Points in the Western Region.
The Institute however called on government to maximise full returns in the ‘open and transparent’ bidding process as the country holds competitive advantage in these negotiations.
The IPPR also tasked government to ensure that the Ghana National Petroleum Corporation, (GNPC), which has been awarded a block out of the total six oil streams in the country offers value for money.
IPPR believes the time has come for the entire activities of GNPC to be rigorously subjected to proper value for money audit.
The statement noted that GNPC needs to be more accountable to the people of Ghana than it currently is, adding that the use of proceeds from the country’s oil resources by the State Institution should bring value to the people.
The Institute wondered whether or not an enabling environment has been created for the adoption of local content within the petroleum sector.
It cautioned government not to capitalize on the local content participation to select party faithful without proper scrutiny.
Read Below The Full Statement:
The Institute of Public Policy Research reacts to Ghana’s first ever competitive oil bidding process.
In accordance with the Petroleum Exploration and Production Act, 2016(919), the government of Ghana launched the firrst-ever competitive bidding for the allocation of oil blocks in the petroleum upstream sector.
We commend the government for complying with this law which was passed by the erstwhile Mahama administration. This is because, earlier this year, the Energy Ministry directly engaged and signed an agreement with Exxon Mobil for the Deep water Cape Three Points Offshore oil field.
This latest development by the Energy Ministry we believe should enhance transparency in the award of contracts in the upstream sector.
The Institute of Public Policy Research however calls on government to maximise full returns in the ‘open and transparent’ bidding process as the country holds a competitive advantage in these negotiations.
The Cape Three Points basin has one of the lowest basins in the sub region. Also, the existence of already built subsea structures, pipelines and other infrastructure means that companies who win bids will have a shorter transition period from discovery to oil production.
The decision of the erstwhile administration to also start a ligation process against Côte d’Ivoire which was brought to a successful conclusion by the current government at the ITLOS also adds to our competitive edge.
We expect government to make these pointers re ect in the negotiation process. Already, a lot of foreign companies have expressed interest in the bid.
At IPPR, while it is understandable that GNPC be awarded Block 1, out of the six blocks, because it is a shallow water terrain, IPPR believes that the time has come for the entire activities of GNPC to be rigorously subjected to proper value for money scrutiny.
GNPC needs to be more accountable to the people of Ghana than it currently is. The use of proceeds from our oil resources by the State Institution should bring value to the people of Ghana.
In furtherance, one other concern is the 5% local content participation. Regulations 4(2) of the Petroleum Exploration and Production Act, 2016 mandates at least a 5% of equity participation of local companies in the upstream sector.
The following public interest questions deserve answers from government; 1. What enabling environment for the adoption of local content has government and existing foreign operators created so far?
For example since Exxon Mobil signed an exploration contract with government in January 2018, a local partner is yet to be selected.
2. How will the local partners be selected to meet the local content requirment? IPPR cautions that this should not be an opportunity for party faithfuls without capacity to be chosen to meet this regulatory requirement. The process must be open, transparent and encompassing.
3. What other transparency and accountability plan is government putting in place to make sure that Ghanaians do not front for foreign companies in the allocation of the 5% indigenous content as the case may be?
4. A new local content secretariat was recently created at the Energy Commission. Together with the local content desk at the Petroleum Commission, how well has government resourced these o ces to e ectively make sure that Ghanaians fully participate in the upstream oil and gas sector?
5. Prior to the launch of the competitive bidding process, the Energy Ministry set up a 19-member licensing round and negotiation committee. How much will it cost the tax payer for all the promotional preparations including the roadshows for London and Houston at a time that many international companies have already expressed interest in the oil blocks?
Eugene B.G Bawelle, Executive Director.
