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Opinions of Thursday, 15 November 2007

Columnist: Sam, Leo R.

Future Oil Business In "Poor" GHANA vs. Present Oil Business In Rich ALBERTA

Future Oil Business In "Poor" GHANA vs. Present Oil Business In Rich ALBERTA ( Canada )


 -----  GHANA                     ALBERTA 
AREA 92,100 SQ. M 255,285 SQ. MILES
GDP * $ 2,130 $ 29,480
* ( Gross Domestic Product /capita in U.S. dollars )

** ( This Trust Fund was established by putting aside part of the Oil Royalties.. The interest on the

Fund has been spent on many development projects including educational scholarships and

Innovative medical research. Primier Peter Lougheed's government started the Fund in the 1970's.

This is an admirable legacy for a visionary politician. )

Oil ( Black Gold ) seems to be the best resource for any nation to possess NOW. All Ghanaians are delighted to know that CAPE THREE POINTS off the coast area between Takoradi and Axim has oil deposits of potential commercial value. Is it likely that this discovery will help alleviate poverty, which is so obvious in many parts of our dear motherland ? Is it likely that this impending windfall will be high jacked by the few GREEDY Ghanaians, who have already amassed wealth ( quite a few of them through questionable means ) to increase their possessions both at home and in foreign countries ?

The research needed to locate oil is very expensive. The technology needed to extract the oil and refine the products is also very very expensive. The risks undertaken by oil companies are always incalculable.

It is therefore reasonable to expect that once the companies have undertaken all the initial and expensive risks, they would like to recoup all their expenses and make SUBSTANTIAL profit for their workers and share holders. This attitude is justifiable but there must be a limit. Social Justice has a definite part to play here.

The owners of the resource ( in this particular case Ghanaians ) also deserve a FAIR SHARE of the profits derived from oil exploration. This should come in the form of ROYALTIES paid by the Oil companies. After all, oil is a non-renewable resource. Once it is extracted, it is gone forever. Royalties received must be wisely invested for the development of the country for the present as well as future generations. Our GDP, our life expectancy and our enrollment in elementary school should be raised. The citizens of Ghana have to deal with the environmental problems created.

Negotiating royalties with the experienced multinational oil companies is a very complex process.

Alberta, the oil capital of Canada has been in the oil business since 1947. However, the question of royalties paid is still a sour problem.

Just this year ( 2007 ) the newly elected Premier of Alberta ( Ed. Stelmach ) appointed a Panel of Experts to examine the problem of royalties paid by oil companies to the Government of Alberta. The panel just published its report entitled : FAIR SHARE.

After carefully analyzing all the data available in many oil producing countries including Alaska, Norway, Nigeria, Libya etc, the panel RECOMMENDED that Alberta should hike the rate of royalties paid by the oil companies by 20%. The panel observed that even with this increase, the royalties paid will still be below the level charged by other oil producing countries. As expected, the reaction of the oil companies was negative. They threatened to withdraw their investment from Alberta. The recommendation is expected to give the Alberta Government two billion dollars more in royalties. It is noteworthy that only one of the companies, Encarta made a profit of six billion dollars last year.

The main objective of this article is to raise some pertinent questions that ALL Ghanaians ( including those holding the highest positions as well as the ordinary citizen on our streets ) should ponder over.

1. Should TRANSPARENCY prevails in the future oil business in Ghana ?

2. Should the concept of ZERO TOLERANCE for corruption be evident in the oil business in Ghana ?

3. How can we choose the best NEGOTIATORS to deal with oil companies on behalf of Ghana ?

4. How can we prevent the "PSEUDO CONSULTANTS" from getting involved in the oil business ?

5. Should Political Parties be soliciting donations from Oil Companies ?

6. Should we not incorporate THE RIGHT TO INFORMATION act in the oil business in Ghana?


7. Should we not develop a plan as to how the ROYALTIES will be spent ?

Sir Gordon Guggisberg spent the revenue derived from the lucrative Cocoa, Gold, Manganese, Diamonds and Timber business in the 1920's to build KORLE BU HOSPITAL, ACHIMOTA SCHOOL, TAKORADI HARBOUR and new railway lines.

We should always keep in mind that the University of Ghana, Legon had its roots in Achimota: the Kwame Nkrumah University of Science and Technology also had its roots in Achimota.

The three major founders of Achimota School, Dr. James Emman Kwegyir- Aggrey, Sir Gordon Guggisberg and Rev. Alexander Fraser must be revered for the educational legacy they established for Ghana They are true selfless HEROES.

Why can't we get some honest hard-working leaders to help manage the oil royalties which MAY come to the people of Ghana in the near future ? Many Albertans have become millionaires through the oil industry. They have genuine companies, which really do productive business by manufacturing items needed by the oil companies. They are NOT fake consultants who just got paid by getting dubious and fraudulent contracts. No one should be allowed to place himself / herself in a position that will enable him / her to benefit from the oil business UNLESS it can be shown CLEARLY that genuine productive work has been done.

As President John Kufuor put it " . A major oil find will turn Ghana into the AFRICAN OIL GIANT.

The discovery will fast track the country's economic march. . Now with oil, as a shot in the arm, we're going to fly" ( Edmonton Journal - Monday June 25, 2007 )

Imagine an oil industry in Ghana depositing 85% of the royalties into a Heritage Savings Trust Fund.

What a great TRUST FUND that would be !!!

I have assumed that our bureaucrats will find pseudo legal means to pocket the remaining 15%. I am seriously hoping that they will NOT divert a higher percentage to their foreign accounts.

Imagine using part of the royalties and the interest on the Trust Fund to build TWO SUPER HIGHWAYS across Ghana:

1. From Takoradi to Lawra

2. From Tema to Navrongo

What an economic boost these highways will bring to all the ten regions in The country !!!

For more information on the Alberta Government ROYALTY PANEL FINAL REPORT go to the website

Hopefully the Ghana Government will also establish a website to provide full information about the FUTURE oil industry in the country. If a Heritage Trust Fund is ever established, one should be able to access all information on the internet. This should include:

1. The total amount in the Fund

2. Names of the board of Trustees

3. Long range plan for Projects to be undertaken ( At least a 7-Year Plan ).

4. Clearly stated criteria for awarding contracts.

5. Evidence to support COMPLETED projects.

The board of Trustees should DIRECTLY repot to PARLIAMENT. Under no circumstances should any official have the audacity to refuse to appear before parliament.

If ordinary Ghanaians are to benefit from the FUTURE oil business, TRANSPARENCY is the key. Secrecy in any transaction will encourage corruption. Secret delegates should not be sent all over the world to negotiate or find information on behalf of Ghana. We are all aware that members of the large delegations often sent abroad just go shopping for their personal luxury items and/or spend the time attending to their medical needs at the expense of the country..

In this age of advanced technology, it is possible to conduct a lot of business through Tele-conferencing without leaving the office. Let our Ambassadors and other diplomats get involved in modern information technology to communicate and send relevant information back home. In the long run this will be far less expensive than the large delegations often sent abroad.

PARLIAMENT must truly be in control of the oil business. It must NOT just be a rubber stamp. The private oil companies must be allowed to recoup all their legitimate initial expenses plus a generous fair profit. However, GHANA deserves a fair share of the profits !!!

Let the discovery of oil be a BLESSING for Ghana instead of a CURSE.

Let the discovery of oil help produce a large MIDDLE CLASS of reasonably well-to- do Ghanaians instead of pockets of extremely filthy RICH INDIVIDUALS with huge bank accounts in Europe and America.

Let the discovery of oil help promote PEACE and DEVELOPMENT instead of UNDERDEVELOPMENT and WAR.

All the above wishes can be achieved with TRANSPARENCY, ZERO TOLERANCE FOR CORRUPTION and ACCOUNTABILTY.

God bless Ghana.

Leo R. Sam
Edmonton, Alberta Canada.

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.