The Western Region Chiefs’ 10% Oil Revenue Demand: Some Options

With Ghana’s Oil discovering in commercial quantities, all sections of society both local and abroad have expressed their joy with reservations in respect of unforeseen occurrences that lies ahead of Ghanaians. No comments were ever made without referring to Nigeria particularly her Niger-Delta. Why Niger Delta? Niger Delta because it showcases setbacks associated with exploration and production oil as well as remedies to address them. Niger Delta, a petroleum rich region, has become synonymous to the famous Dutch Disease, the neglect of other economic sectors while concentrating on oil sector, and poverty, unemployment, socio-economic inequality, dysfunctional social services, infrastructure underdevelopment and environmental degradation.

When the issue of the petition on 10% oil revenue allocation by the Chiefs of Western Region came up, the author turned to the ‘Almighty’ Niger-Delta, to find out what possible solutions therein regarding this particular demand by the good people of the western Region. Behold! there exist legislations and perhaps a panacea - Allocation of Revenue (Federation Account, etc) (Amendment) Decree of 1984 and 1999 Constitution of Nigeria. These important legislative documents could be of immerse assistance to all parties dealing with the petition and also engender evidence-based legislation the world now yearns for.

The above legislations were part of efforts by the people of Nigeria for that matter, the government, to deal with the unforeseen developments being experienced in the oil producing regions, notably the Niger-Delta. In heat of discussion surrounding the allocation of oil revenue to oil producing states, the then Federal Military Government of General Ibrahim Babangida promulgated the Allocation of Revenue (Federation Account, etc) (Amendment) Decree of 1984. The Decree provided that 1.5 per cent of aggregate revenues accruing to the Federation Account derived from petroleum resources, shall be transferred to a dedicated fund for the development of the oil producing region. Without doubt, this was part of the deliberate effort to make laws that engender development in the Niger Delta area. This was also a very commendable measure that gave a positive impetus to the evolving impression on the government’s determination to positively impact the Niger Delta.

Subsequent to this Decree, the Federal Military Government promulgated the Oil Mineral Producing Areas Development Commission Decree, to assist in managing the oil revenue ear-marked for the development of the regions. The Niger Delta Development Commission (NNDC) was also established by an Act of Parliament in 2000 to deal with the sustainable development of the Niger Delta region.

A keen observation of the media reportage on the development of the area seems to suggest that the region is still suffering from the plights alluded to earlier on, however, project execution profile of NNDC attest to the fact that there is tremendous improvement in the state’s effort at ameliorating the plight of the oil and gas producing area. The only hitch is that the problem had been left unattended to for so long that present effort at addressing them would appear not to be apparent. Therefore, what is expected of Ghana when she is on the verge of producing oil in commercial quantity and promulgation of oil laws is to be ahead of time in addressing issues that have reared their ugly heads in the Niger Delta through the current legislation.

As I would totally agree with the sections of the public who suggested that the Petroleum Revenue Management law is for the land or the country and not for the Western Region, and must benefit the entire country, the issues raised by Western Regional Chiefs must be considered based on the legislative developments in the Niger Delta. In doing so, the law must be carved in such a way that it would be applicable to other oil producing regions that might emerge and not just Western Region. In that regard, Western Region would have been automatically or indirectly captured.

On the other hand, the Western Regional Chiefs can present the petition in the form of a proposal to the current Constitutional Review Committee in the name of the people Ghana or on behalf of possible oil emerging region indicating a percentage of oil revenue that must go to oil community/or region based on scientific evidence. Oil emerging region is mentioned because ample evidence exists on the possibility of oil discovery on other part of the country, particularly the Volta basin.

Presenting a proposal to the current Constitutional Review Committee was what transpired in the drafting of the 1999 Constitution of Nigeria, when Commission was set up to review oil revenue allocation laws in the wake of several agitations from the oil producing regions. Currently, the 1999 Constitution stipulates that not less than 13 percent of oil revenue is to be transferred to the oil-producing states in a manner relevant to their population, size and other factors. This provision in the Nigerian Constitution has been applied to on-shore oil production only.

The question then is what happens to revenue allocations from the offshore oil production which applies to the 10% of revenue demand by the Chiefs of Western Region. In the wake of oil companies relocating from on shore to off shore platforms due to insecurity, the Coaster States took the Federal government to the Supreme Court for the inclusion of offshore production into 13% Constitutional allocation because of dwindling revenue allocation to them. The Coastal States argued based on the international Convention of the High Seas, the Convention on the Continental Shelf which provides continental shelf sovereign rights to them which include exploration and exploitation of natural resources –mineral and other non-living resources of the seabed and subsoil together with living organisms belonging to sedentary species. The states argued that they had the right not only to drill crude from territorial water, but also up to the continental shelf. Each of them also claimed that its territory went beyond the low-water mark and insisted should be part of the revenue base for the constitutional allocation. The Supreme Court however ruled in favour of the Federal government by drawing on Article 77 & 78 of the UN Convention on the Law of the Sea to support its holding that the Federal government had authority over offshore and continental shelf crude (See http://alhajikromahpage.org/alhajinigoil.htm for full story and analysis).

The ruling of the Nigerian Supreme Court is in agreement with the Constitution of Ghana also gives ownership or rights to petroleum resources find offshore to the Government of Ghana on behalf of her citizens. Nevertheless, the responsibility for addressing the peculiar problems of the oil-producing areas, Western Region in this case, is inextricably tied to the Government based on our Constitutional provision. While the Current Ghana’s Constitution and International Conventions are clear on ownership and right to the oil find, the allocation of revenue is still implicit. It is therefore imperative that the current Constitutional Review Committee deal with allocation of the oil revenue clearly in the on-going constitutional review exercise if the petition should be presented as a proposal for consideration.

Legislative developments to mollify the Niger Delta region expose the fact that one can also not ruled out the possibility of the Executives introducing Legislative Instruments to address some of the concerns raised by the Chiefs. In anticipation of that, which I believe the government do, a platform immediately needs to be created to allow not only the people of Western Region to air their views and reservations but also for the people of Ghana. At such platforms, a time table could be drawn to address their concerns, that is, if there is going to be a legislative instrument and policy the Executive or the Legislature deemed fit would tackle their concerns. This would allay their fears and make all the stakeholders accountable in case a party renege on its promise.

One vital principle Ghanaians have come to accept is that any natural resource discovered on any part of the country, say the oil find, is a national asset. Therefore, Ghana as a unilateral state, one nation and one people must share all benefits accruing from such resources. This notwithstanding, environmental hazards or fall outs as a losses are not and can not be shared in totality by all citizens, even if the tax payers’ money is used for the clean up, in the same manner as the benefits. It therefore behoves on all of us as Ghanaians to fashion out a law that would demonstrate that we are our brothers’ keepers in the interest of the nation and generations to come.


Author: Cephas Egbefome
Assistant Research Officer
Office of Parliament
Parliament House
Accra

cegbefome@yahoo.com