Nigeria Content Online

Since Wednesday the
15th of December, the government and people of Ghana have been thrown
into celebrations as they join the global league of oil producing
countries. Ghanaian President John Atta Mills, opened the valve at the
Jubilee field where oil was discovered in commercial quantity in 2007.
The field has about 500 million barrels proven reserves and a potential
of over a billion barrels. The first phase of the production has begun
with about 55,000 barrels per day with a potential increase of 120, 000
barrels in January 2011.

The jubilee
partners include Tullow Oil plc (37.7 percent), Anadarko Petroleum Corp
(23.49 percent) Kosmos Energy (23.49 percent), and Ghana National
Petroleum Corporation (GNPC) (13.75 percent) Sabre Oil and Gas (2.81
percent) and E.O. Group (1.75 percent). Oil production has a potential
of supplying 400 million dollars worth of revenue to Ghana’s 2011budget
and one billion dollars annual income in subsequent years. However
there is widespread fear that events may go the way they have gone in
many other oil rich African countries especially neighbouring Nigeria.

Although it has
been more than three years since oil was discovered in Ghana, there is
still no legislation to regulate the sector. The Ghana Petroleum and
Exploration Bill 2010 is still being debated in the parliament. As the
valve opens for oil to flow, Ghana may depend on an ad hoc regulatory
architecture until the Bill is passed into law. As a country with no
oil production experience, Ghana will need to build up a brand new
bureaucracy and man power for the sector to take off. With an apparent
lack of indigenous man power, an option may be to import personnel from
neighbouring Nigeria while an aggressive man power development
programme is launched. Many civil society activists believe that a
particular clause in the Bill that seeks to prevent government from
securing oil backed loans has been excised. Speculations are therefore
rife that these gaps will provide opportunities for multinational oil
companies who are in partnership with the Ghanaian National oil company
to have a field day. In many African countries like Nigeria and Angola,
this is the case. Multinational oil companies have ripped of many host
governments because they lack the requisite capacity to negotiate
favourable agreements. What has therefore happened is that the
agreements entered into mostly turn out to be unusually skewed in the
favour of these companies. The so called natural resource curse is
therefore something Ghanaians must watch out for. Former Venezuelan oil
minister and cofounder of Oil Producing and Exporting Countries (OPEC),
Joan Pablo Perez Alfonzo, once predicted that oil was the devil’s
excrement that will only bring ruin to countries where it is found.

He was referring to
a situation where many countries that are rich with natural resources
have not managed to get their development right. Such countries depend
on oil exports and overtime become economically troubled, often
becoming authoritarian and conflict ridden. A very important symptom of
the resource curse is increased appetite for spending due to the oil
boom.

A former Nigerian
military Head of State, Yakubu Gowon, was quoted as saying on the
national television during the oil boom of the 1970s that “fellow
Nigerians our problem is no longer money but how to spend it”. There is
also the case of volatility of oil prices and fiscal indiscipline which
hampers growth and poverty alleviation. The flow of petrodollars
replaces more stable and sustainable revenue streams exacerbating
patronage and encouraging development as well as accountability
deficits. The situation makes it difficult for local manufacturers to
compete while incentives become distorted. The Ghanaian economy has
shown very commendable positive growth signs recently and must strive
not to allow her growth trajectory to be distorted by the flow of
petrodollars.

One of the greatest
weaknesses of the Africa’s extractive industry is the lack of a strong
regulatory environment. This is sometimes due to capacity weakness or
corruption. Ghana has an opportunity to insist on a regulatory
environment that equates international best practice. Ghana National
Petroleum Corporation must strive to be everything that Nigerian
National Petroleum Corporation (NNPC) is not. A recent study the
program on Energy and Environment at Stanford University describes NNPC
as “neither a real commercial entity or a meaningful oil operator. It
functions as an instrument of patronage. Each transaction generated by
its profuse bureaucracy provides an opportunity for well connected
individuals that act as gate keepers whose approval must be secured in
contracting processes. It ties oil operations to massive red tape which
increases cost and uncertainties (corruption) and deters investment”.

Multinational oil
companies are the biggest beneficiaries of these shady practices as
they implement their ‘famous’ double standards. While they are happy to
enforce high standards in their home country, they insist on an
entirely porous standards in host countries in Africa in active
connivance with government officials. Ghana must be vigilant to enter
into business deals that can better the lot of her people.

Most importantly
Ghana needs to look at the human poverty, infra structural deficit and
ecological catastrophe in the Niger Delta region to wake up from their
slumber and thread with care!

Uche Igwe, Africa Policy Scholar at Woodrow Wilson Centre sent this piece from Washington DC, USA