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From: wolda002@umn.edu
Date: Wed Dec 22 2010 - 00:37:33 EST
[image: Ghanaian Chronicle (Accra)] <http://www.ghanaian-chronicle.com/>
Ghana: Questions On Oil
Arthur Kobina Kennedy
20 December 2010
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column
On December 15th, Ghana joined the ranks of nations that produce oil in
commercial quantities. There has been euphoria- a lot of euphoria.
Therefore, even while we thank a kind and just God for this blessing, we
must remind ourselves of some dangers and mis-perceptions that are obvious.
First, the very ceremony to start the production graphically illustrated the
ability of this blessing to divide and to curse us. Somehow, the President
and his staff found it difficult to assign proper roles to his predecessors
in the ceremony.
Indeed, sources close to the former President complained bitterly about the
deliberate effort by the Mills government to downplay Mr. Rawlings' role in
the oil find in the brochures handed out at the ceremony. This was addressed
by some grudging acknowledgement of his role.
To be candid, Mr. Rawlings, for establishing the GNPC and Mr. Kufuor, for
refocusing it on its core mission, leading to the oil find, deserve the most
credit for the find.
Second, our expectations regarding the oil are way out of proportion to the
known value of the reserves. The most optimistic analysts project that we
will earn at most 20 billion USD from the oil over the next two decades.
This is far less than Ghanaians in the Diaspora will bring home in the next
decade! Also, it will be just as much as we can earn from Aluminum with the
right policies. To be fair, we will earn significant revenue from the gas
that has not been factored into this.
Third, other countries have been here before. Nigeria and Angola had far
bigger reserves, produce more and do not have much to show for it. For
example, while we will be producing around 200,000 barrels per day at the
peak, Nigeria produces more than a million barrels per day and has done so
for years.
Given the examples of these countries, it can be inferred that oil reserves,
on their own, do not beget wealth and development.
Fourth, even we have been here before. We have produced significant
quantities of gold and have little, very little to show for it, either in
the local communities or nationally.
The contrast between South Africa and Ghana in development despite the fact
that we have produced gold comparable to them is a sobering reminder of how
one can have so much resources, and yet end up with little development.
To compound all these, our leaders, in dealing with the projected revenues,
have not started well. In addition to being significantly behind in
em-placing the necessary laws and institutions to deal with oil revenue, we
are already ignoring the will of the people.
We have been aware of this find for the last three years and yet are
struggling to put in place some laws and regulations that are sorely needed.
In flagrant disregard of the 80% of those consulted who opposed the use of
revenue for collateralization, the NDC government is going ahead to use
significant portions of our oil revenue as collateral for loans. In addition
to disregarding their expressed wishes of Ghanaians, our leaders described
their disagreement as "foolish" and "baloney".
To help us speedily secure the benefits of oil to our people we must ask
some urgent questions.
First, to what extent will our oil find affect petrol prices on the street?
Will they be reduced and by how much? Why was this not addressed in the
budget? It is important that we determine clearly how the oil will affect
petrol prices. As an ancillary and related question, how will this affect
the price of electricity?
Second, how are we going to actualize our desire for local content in the
oil industry? We all know that despite the oft-expressed wishes to have
Ghanaians employed in the industry, they cannot be employed without skills.
It is reported that only 30 of the about 100 people working on the first rig
are Ghanaians. What is the target? Which institutions are ready to train
them and when is the time-line? Where are the scholarships that will help
interested Ghanaians acquire the needed skills?
Third, how are we going to protect our environment in the light of the oil?
We are a country that seems helpless in the face of floods caused by rains
in Accra and the annual opening of the dam in Burkina Faso.
How are we going to deal with an oil spill? How are we going to deal with
increased traffic between Accra and Half-Assini?
Fourth, how are we going to address the legitimate claims of the people of
Western region regarding the oil revenue? If Western Region deserves a
portion of the revenue, then does Ashanti and Brong Ahafo deserve portions
of revenues from Gold being mined in their jurisdictions?
Indeed, how does one have equitable revenue-sharing in a unitary state that
is fair to those who live near natural resources and therefore are most
likely to be affected by environmental problems?
Fifth, how are we going to ensure accountability in the management of the
oil revenue? In a nation with chronic budget deficits and spiraling
government expenditures on wages, how does one ensure that we do not
short-change posterity by pandering to those alive now to win elections?
I know that some have defended collaterization as a way of ensuring
development and building infrastructure etc. How do we maintain this
argument when we know that a road built today will need to be rebuilt in 15
to 20 years?
By this logic, can a President mortgage every drop of oil or the very last
pesewa of expected revenue in pursuit of development and infrastructure? How
much should be reserved for posterity?
These are urgent questions.
It is obvious that we need answers to these questions as soon as possible.
These answers must be devoid of partisanship and politics is already holding
us back. Before the NPP left office, it negotiated agreements regarding the
gas that will be produced in addition to oil. Motivated by the
unsubstantiated believe that these agreements were tainted by corruption,
the NDC government has sought to abrogate and/or undermine many of these
agreements.
These efforts by the NDC government has delayed the emplacement of systems
and institutions that would have safe-guarded the interest of Ghanaians.
Furthermore, the desire by our government to disrespect agreements reached
properly by sovereign institutions of Ghana without due process has
undermined the credibility of our country amongst investors.
These have been fueled by articles critical of Ghana in the international
media.
While we must check corruption, we need parties and actors to believe that
others too, are honourable and patriotic. Those in government who assume
that all previous governments and Ministers were corrupt are misguided and
will harm our national interest.
Specifically, the attitude towards functionaries in the Kufuor
administration has not been helpful.
With these in mind, let us move forward to address the questions that have
been raised.
Let us open our hearts, learn from others and protect our country's
interest. In answering these questions, we must be mindful that the fate of
generations yet unborn are at stake too. We must think, not just of the next
elections but also, of the next generation.
Let us move forward, together.
May God bless Ghana.
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