Some 18.2 percent of Ghana’s 22 million people are
deemed “extremely poor” by the UN as they live on less than a dollar a day,
struggling to access basic social services like health, water and education.
The potential for the oil finds to transform the economy
and the lives of the poorest people is manifold.
Ghana’s officials, however, say they are concerned that the oil
discovery is “perhaps the greatest managerial challenge” facing the West
African country in the 51 years since it gained independence.
“At this point we acknowledge that we lack the know-how
to manage this enormous resource but we are blessed with the experience of
others,” said Francis Ackah, engineering manager of the Ghana National
Petroleum Company (GNPC), the agency which oversees the country’s petroleum
resources.
In March 2008 Ghanaian President John Kufuor, speaking
at an extractive industries forum, warned that “instead of being a blessing,
oil sometimes proves the undoing of many… nations who come by this precious
commodity”.
Money starts flowing
The first major discovery that hinted at the riches
under Ghana’s
coastline was announced in June 2007. A second major find was confirmed in
February 2008. Both discoveries were 65km off the coastal town of Effasu.
The government is aiming to produce 100,000 barrels per
day in early 2010. Output is expected to reach 200,000 barrels in five years,
when Ghana would be the
seventh largest oil producer in Africa.
The GNPC estimates revenue levels of almost US$3 million
per day, or some US$1.6 billion per year. Ghana’s current gross domestic
product (GDP) is US$31.23 billion and per capita income is US$1,400.
The money has already started flowing. On 1 April
US-Canadian company Tullow Oil, one of the exploration groups, declared payment
of tax liabilities of US$2.3 million to the government.
Transparency
Farouk Al-Kasim, an oil resource management consultant
from Norway who is in Ghana to assist
in capacity building, told IRIN the biggest challenge the Ghanaian government
faces is ensuring transparency from the outset and avoiding corruption.
To achieve this, the country must first review its legal
framework, specifically the Petroleum Exploration and Production Law passed in
1984, Al-Kasim said.
Accusations are already flying that transparency is not
working as it should.
“We need to keep an eagle eye on the contracts we are
signing with the oil companies,” said the Executive Secretary of Transparency
International’s local chapter, Vitus Azim.
He said the current agreement-signing processes with the
oil companies had been “less than desirable” and that if civil society and
local communities were not allowed to monitor the deals from the outset it
“could spell disaster”.
Ghana has consistently scored averagely on the Transparency
International corruption perceptions index. In 2007 it was ranked 69 out of 180
countries surveyed worldwide.
Kojo Kwarteng, a spokesperson for the government,
dismissed the concerns. He told IRIN the government was currently most
concerned about making sure it could independently verify the profits oil
companies were making so it could make sure it was getting its cut.
Under existing law, companies involved in the
exploration and production of oil will pay royalties to the government of 5
percent, as well as interest, and income tax of 35 percent.
“What we need is clear guidelines backed by law to make
sure we are not shortchanged,” Kwarteng told IRIN.
The “Norway model”
GNPC official Francis Ackah said the government’s
longer-term plan was to adopt the so-called “Norway
model” of resource allocation, a revenue management scheme employed in Norway, the
world’s third largest oil exporter.
Norway in 1990 set up the Petroleum Fund of Norway. Run by the
central bank, the fund converts oil revenues into stocks and bonds. The fund
then hires external managers to invest the assets. Finally, the money is
allocated to social services like roads, schools, houses, and health centres,
and is given out as loans to small-scale businesses.
Steve Manteaw of the Ghanaian non-governmental
organisation ISODEC said Ghana
is “not developed enough” to employ this model and cannot afford to put money
away in a fund when it has so many immediate needs.
“We must develop a ‘Ghanaian model’ that will factor in
our peculiarity, but incorporating all best practices across the world,” he
said.
Transparency International’s local chapter, however,
believes the “Norway model”
is the best for Ghana
“because of its core principles of transparency and independence in oil revenue
management”, said Transparency International’s Azim.
Communities
As civil society and the government haggle over
oversight at the top level, community leaders have made it clear they are not
going to remain silent.
“We will not sit down for the wealth to elude us, we are
ready to fight for what rightfully belongs to us,” warned Asagyefo Ogyeahohoo,
the traditional chief of one of the communities whose shores will soon play
host to oil exploration activities.
“The battle has just begun,” he promised.
The Ghanaian government has already barred these
communities from fishing around areas where oil exploration is under way; a
move some of the community representatives say threatens their livelihoods.
Manteaw of ISODEC said: “Dialoguing with the communities
to agree on a formula for distributing the oil wealth is a right the
communities cannot be denied.”
Drawing on the experience of Nigeria,
he told IRIN that excluding local communities in the decision-making process
would “breed mistrust that could trigger the sort of conflict witnessed in Nigeria’s Delta
region”.
Some civil society groups have even called for the
country’s Human Rights Commission to be involved - to check that any promises
made by government to the communities are honoured.
Manteaw noted that according to the Extractive
Industries Transparency Initiative, “after 100 years of mining gold in this
country there is little to show [for it] in these communities.”
For him, promises by government to share out the gold
wealth fairly with local communities have been nothing more than empty. Much of
this he attributes to corruption.
Government spokesperson Kwarteng said critics should
keep an open mind. “We are committed to doing things differently now; the
lessons are being learnt; we hope our actions so far will be a testament to our
resolve to make this enormous resource benefit the people,” he said.