Transparency key to efficient oil management

Page 49: March 27, 2008.
Story: Albert K. Salia
THE Member of Parliament (MP) for Dome-Kwabenya, Professor Mike Oquaye, has stated that the management of oil wealth requires transparent, non-politicised and efficient systems with in-built checks and balances.
“This is the way to ensure that resources are properly applied. The Norwegian success story became the toast of the conference because all oil production and funds could be traced even on the continent,” he said.
In a paper submitted to the Daily Graphic on the “challenges of the discovery of oil in Ghana”, Prof. Oquaye, a former Minister of Energy and Communications, therefore, suggested the establishment of a separate oil fund at the Bank of Ghana to make room for easy tracing of all oil money.
He said an oil fund management team, comprising distinguished senior citizens in the world of business, industry, banking and commerce, should be set up to see to the administration of the fund.
“Monthly accounts should be rendered to government and Parliament. Up-to-date computerised system by which oil production and oil monies can be transparently monitored, should be provided,” he said, suggesting that the government should also provide constant and up-to-date information to citizens on actual oil revenue collected, reserves, production, prices, licences and fiscal regimes for private investors.
Prof. Oquaye also recommended the setting up of a national committee to accelerate the capacity of a middle-level technical human power to enable Ghanaians to benefit from the petroleum operations.
He explained that the local content, which referred to the use of Ghanaian goods and services in the petroleum operations, needed to be of high quality consistent with global standards.
Unfortunately, he said, Ghana lacked the middle-level technical human power and unless an emergency plan was put in place to provide the requisite training, “it would take us a very long time to benefit from the crucial ancillary jobs”.
He named crucial training areas to include working on petroleum separation facilities, construction of offshore structures, pipeline manufacturing from steel and related works, welding and joinery, hooking up already built structures, and a whole variety of operational and technical maintenance activities.
Prof. Oquaye also suggested that all sources of conflict in the area should be resolved before it degenerated into any problems.
“In this connection, social corporate responsibility should be exhaustively examined and incorporated into our oil arrangements/contracts,” he said.
He said there should also be strict environment management and control to avoid conflict with authorities and people while health and safety auditing must be put in place with the ultimate control in the hands of Ghanaian experts.
“In order to avoid pollution and damage to health from effusions and emissions, we should put together Ghanaian experts from home and abroad to analyse and recommend on best practices,” he said.
He said as part of the development plan there was the need for the full parameters of de-commissioning to be provided for.
“The best international legal requirement is that the approved de-commissioning plan should be subject to periodic review and funds set aside for the project. The funds would be audited yearly and under the joint escrow account control of the oil company and the appropriate Ghanaian authority such as the Ghana National Petroleum Corporation (GNPC),” he said, adding that “insurance cover should be taken as further guarantee”.
Prof. Oquaye said oil must improve the life of Ghanaians socially and economically and advised that care be taken to ensure that poverty levels were not widened because of the discovery.
According to him, a social equalisation policy should be designed at once so that “we do not have a nation of ‘haves’ and ‘have nots’.
“Oil money should be used to deepen brilliant policies of our government including universal health insurance, fee-free and compulsory education, school feeding for all, free transport for all pupils, models of schools for education equalisation etc.,” he stated.
Prof. Oquaye said the needs of the poor must be specifically provided for by legal mechanisms adopted in the oil management regime.
He said that had become so imperative that the World Bank placed a conditionality on its financing of the Chad-Cameroun pipeline project in 2000.
This resulted in the establishment of an oil revenue management plan and legal framework. The arrangement provided that the bulk of oil royalties and dividends should be spent on poverty reduction areas, including health, education and infrastructure. It was specifically provided that 10 per cent of oil proceeds should be set aside for future generations.
Touching on ICT, Prof. Oquaye called on the Ghana-India Kofi Annan Centre for Excellence in IT and other institutions to come together to draw up a comprehensive programme towards applying oil wealth to make Ghana a global ICT destination.
He said that would provide the base for Ghana’s Open University, national distance learning programme, telemedicine and the use of ICT in national development generally, adding that “ICT development is also the surest way for Ghana to protect its oil revenue”.
Prof. Oquaye also reminded Ghanaians that the oil find should not stop the country from tapping alternative sources of energy, especially in the field of renewable energy.
He said the Ministry of Energy had, in 2005, completed a comprehensive mini-hydro programme which identified the construction of 22 mini-hydro dams.
He said the ministry’s plan included a strategy where the water overflows from the dams would be used for irrigation purposes to boost agricultural production.
Prof. Oquaye said while three of the dams would be developed soon with Chinese assistance, the rest could be developed from oil revenue to open up the hinterland and boost total energy outlay, as well as rural development.
He said UNIDO had helped Ghana to identify her wind energy strength, especially in relation to the Lower Volta Basin area adjoining Togo, saying, “We can tap this beneficially with oil revenue.”
On solar energy, he said whereas the initial capital outlay was very heavy, “once the systems are established, they are the most economical to run once the sun shines. When the oil wells are long dried up, the benefits of solar energy will still lubricate the engines of national development for generations to come”.
Prof. Oquaye said the passage of the Economic and Organised Crime Bill on conflict of interest, a new Code of Conduct for Public Officers and the passage of the law on Freedom of Information and Extradition would all support existing legislation to combat corruption.
He said the Executive and the Legislature must congratulate themselves and do more to consolidate the gains made in fighting corruption.
“This is the scientific way to combat corruption, and not be mere rhetoric. In this, the Kufuor government has shown the way.”