The adoption of direct negotiation for petroleum contracts has become a norm rather than the exception for most oil producing African countries.
This is the position of the Africa Oil Governance Report.
According to the report, nine out of the eighteen countries studied have adopted competitive bidding processes for the award of petroleum contracts but three countries including Ghana are yet to adopt same.
Yet, six countries had no data on competitive bidding processes for the award of contracts.
As a result, the proponent of the study, the African Centre for Energy Policy (ACEP), argues that such countries risk losing the most optimum investment offer for their petroleum blocks.
Speaking to Citi Business News at the launch of the report, the Deputy Executive Director of ACEP, Ben Boakye explained that the passage of Ghana’s Exploration and Production Bill to ensure open allocation of blocks, should provide maximum value for its petroleum blocks.
“For Ghana we want to see the E and P Bill passed immediately to ensure that there is open process for the award of contract we want to see the adoption of beneficial ownership information we want to know who is negotiating with our government on behalf of the people of Ghana,” he noted.
He added, “We also want to see that we are able to properly target the expenditure of revenue that comes from the oil so that we can have evidence of the revenue that is coming in.”
Ben Boakye further lamented the challenge confronting the use of data on oil revenue administration which he contended could impact transparency in the management of oil revenue,
“We have had over 3.5 billion dollars coming in so far but if you ask them to identify one project, the politicians will tell you that is what you see with the schools. But it is quite difficult when you want to do the kind of work that we do, trying to strike the impact of the oil revenues to know which projects are actually benefitting from the extraction of the resource,” he stressed.
The Report
The Africa Oil Governance Report (AOGR) studied eighteen African oil producing countries selected based on their membership to the African Petroleum Producers Association (APPA).
The assessment of the oil governance of countries aims at providing the narration on the extent to which countries are adopting best governance practices; thereby providing the status of oil governance in these countries.
The AOGR therefore assesses the efforts of the APPA member countries against eleven (11) selected governance indicators based on data sourced from their legal frameworks including national constitutions and petroleum laws.
Key findings
Some of the key findings included were that;
- Free Prior and Informed Consent (FPIC) is still not widely accepted within the oil and gas industry of the African countries under consideration.
- Mandatory disclosure of oil and gas contracts is still not widely accepted among African oil producing countries.
- There is increasing adoption of open and competitive bidding process for the award of oil and gas rights.
- There are some appreciable efforts by African oil producing countries in adopting open budgeting process.
- Distribution of oil revenues to affected communities is not yet a well accepted norm among African oil producing countries.
Recommendations
Some recommendations offered by the ACEP include;
- In view of the relevance of EIAs to the oil and gas sector, environmental considerations should progressively become a biddable factor during licensing of oil and gas resource rights. Therefore, oil and gas companies that have poor previous environmental record should not be considered for the award of resource rights.
- The Open Contracting Partnership and other contract transparency movements including national level civil society organizations must increase advocacy for the mandatory disclosure of oil and gas contracts. The African Mining Vision, which promotes contract transparency, must develop an implementation and assessment tool for ensuring that member states adopt these principles.
- Countries which do not have competitive bidding provisions in their petroleum laws should introduce them as the default process for awarding resource rights. Competitive bidding processes give countries the opportunity to have the most optimum investment offer for their petroleum blocks.
- African oil producing countries must adopt the principle of FPIC and develop legislation to guide its implementation as a fundamental human right.
- Countries should ensure that their supreme audit institutions have adequate funding and independence to perform their duties. The appointment and removal of any Auditor General of audit institutions must be backed by legislative approval to avoid political interference of their duties and further foster their independence.
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By: Pius Amihere Eduku/citibusinessnews.com/Ghana
