THERE is insufficient transparency in the upstream
contracting process for natural gas in Ghana as required by international best
practice, a study by think tank, IMANI Africa has revealed.
It established that some processes including the award of
rights to international oil companies, were shrouded in secrecy rendering
stakeholders incapable of monitoring and making inputs.
As a result of this, high gas price could obstruct the
desired power generation, lead to high electricity tariffs and negatively
affect the citizenry and industry, according to the study report launched in
Titled, “Effect of upstream gas contracting on electricity tariffs
and inclusive growth-the case of the Sankofa-Gye-Nyame Gas Project”, it was done
in collaboration with the Ghana Oil and Gas for Inclusive Growth (GOGIG).
It was conducted between last year and June this year, with the
objective of accessing the transparency of the upstream natural gas contracting
process in the country with international best practices as yardstick and evaluating
the impact on gas price, electricity and inclusive growth.
The Sankofa-Gye-Nyame field is part of the Offshore Cape
Three Points (OCTP) Oil gas fields. It is estimated to hold 150 million barrels
(mmbl) of oil and 1.45 trillion cubic feet of gas. Oil and gas production
started in 2010.
A gas sale agreement was signed between the government and
OCTP partners including ENI Ghana at a gas price of $9.8 metric million British Thermal Unit
Presenting the report, a research assistant at IMANI, Dennis
Asare said an assessment of the contracting process for the project showed that
it was not sufficiently transparent.
He said the competitive bidding was not employed as required
by the PNDC Law 48, one of the main statues for managing upstream petroleum,
while there was no clear public justification for the direct negotiation.
He said there was no update on the process while the gas sale
agreement and other key documents were not published as compared with
international best practices.
If there was maximum transparency in the contracting process,
he said the country would get optimal gas price that would reduce cost of power
generation, lead to reduced electricity tariffs and improve social inclusion.
Some of the indicators of international best practices in the
contracting process, Mr Asare listed to include openness in contracting
process, negotiation process and fiscal considerations.
Continuing the presentation, Ms Barbara Andoh, a Research
Associate at IMANI said the study also found that the provision of subsidies to
certain categories of consumers had negative impact on the power sector debt which
the citizens ended up paying through taxes.
She recommended amendments of various contracting provisions
in the petroleum sector to mandate the public disclosure of key documents and
procedures to make the regime be in line with international standards.
Reacting to issue during the open forum, Mr Alex Mould, who
was the Chief Executive Officer of the Ghana National Petroleum Corporation
(GNPC) when the Sankofa contract was signed, denied the limited transparency
He said due diligence was done by the corporation in
collaboration with the World Bank and other stakeholders in the industry in the
interest of Ghanaians and that the project had had positive economic impacts.
His submission was corroborated by the current GNPC Manager, Development
and Production, Victor Sunu-Atta and Mr Baluri Bukari, the Local Content and Sustainability
Manager of ENI, one of the Sankofa Project partners.
BY JONATHAN DONKOR
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