You are here: HomeOpinionsArticles2014 08 27Article 322900

Opinions of Wednesday, 27 August 2014

Columnist: Kwawukume, Solomon

Re - Oil Contracts Are Not Null And Void-ACEP.

By Ghana Institute of Governance And Security

On 28th July 2014, The Ghana Institute of Governance and Security (GIGS) organized a day of truthful training workshop for the Parliamentary Press Corp and other Journalists on the Emerging Upstream Oil and Gas Industry in Ghana and The Petroleum Exploration and Production Bill which has received Cabinet approval, but yet to be laid before Parliament to be passed into law to regulate the Upstream Oil and Gas Industry in the country.

Here again, without mincing words, we do sincerely believe from the deepest bottom of our hearts that, if the President and His Cabinet understood the dire consequences and ramifications of this Draft Bill becoming a law to regulate our upstream industry, the President and His Cabinet would not have approved of it.

It was at this workshop that the truth was for the first time told to many of the journalists of this country and what Ghana should be doing rightly to derive the most benefits from God’s gifts of Oil and Gas resources to our dear country Ghana, which our leaders are giving away in the name of investment.

Below is the full text upon which my layman legal opinion was expressed which is being challenged by Mr. Peter Amewu of ACEP, as published by the Business Finder and equally captured by Ghanaweb and other media.

“We have observed that, the Spirit and Intent of PNDC Laws 64 and 84 which were existing laws governing the Upstream Oil Industry before the discovery of oil is, Production Sharing Agreement. But all agreements and contracts entered into up to date are modeled to suit Modern Concession laws which were not in existence when these contracts and agreements were entered into. These agreements are therefore not compatible and in conformity with the existing laws and even to the extent of violating UN Charters on Natural Resources”.

I have never said there is an article in the laws which make the contracts null and void. What I said in my explanation was that, since the contracts were modeled on Modern Concession laws which were not in existence and are at variance with the existing PNDC laws, in my layman legal opinion they are null and void. The professional lawyers know this.

These are statements of facts in law which can be contested and challenged in the Highest Court of the land. Therefore, I do not consider and see my layman legal opinion as inaccurate and misleading. The fact that no specific article or clause in the laws mention that Production Sharing Agreement should be entered into by Ghana, does not mean that all the sections and clauses in the two laws were not crafted on Production Sharing Agreement principles, an indication that the framers of the law have Production Sharing Agreement fiscal regime in mind. Records available indicated that first contracts and agreement signed in the 1990’s by GNPC were Production Sharing Agreements. What the framers of the law failed to do was to title it Production Sharing Agreement laws.

What we are saying is the modification of the old traditional Concession to include Carried and Participation Interests may be an improvement partially, but not in any way superior and better than Production Sharing Agreement. The Modern Concession is a wolf in sheep-skin, equally exploitative as the old Concession.

Our argument is, if the Modern Concession was a better system than Production Sharing Agreement why did not Nigeria stay with it, but moved away from Concession and Joint Ventures to Production Sharing Agreement and Service Agreement? Angola also moved away from Concession after the war to Production Sharing Agreement.

Ghanaians, you are being used as experimental guinea pigs in Africa because our investigations revealed that newly emerging African countries into oil and gas have resisted the Modern Concession and signed onto Production Sharing Agreements. For example, Kenya, Uganda, Togo Liberia, Sierra Leone and Tanzania, who are also frontier Nations yet to start producing resisted the Modern Concession and signed onto Production Sharing Agreements. The Production Sharing Agreement is currently being used in over 75 countries in the world producing oil and gas.

Peter, can your Africa Centre for Energy Policy (ACEP) tell Ghanaians how much revenue would eventually accrue to them from the Jubilee Fields which has an estimated asset value of US$195 billion under the hybrid system- the Modern Concession - you and the CSO Platform on Oil and Gas are championing and collaborating with the World Bank, IMF, Oxfam America, Revenue Watch Institute, Star Ghana, to force down the throats of Ghanaians? The World Bank and IMF have estimated theirs to be US$19.390 billion and US$20.269 billion respectively. We at GIGS have estimated ours to be between US$93.01 billion and US$96.875 billion under the simplest Production Sharing Agreement. We have done the calculations. Challenge them with yours please. We are ready to meet you of the ACEP, the other lobbyist NGOs for the foreign oil companies and the technocrats on any public platform to debate this issue.

We still stand and maintain the layman legal opinion that the oil contracts approved by government so far and ratified by Parliament are illegal and unconstitutional. The passage of this Petroleum Exploration and Production Bill into law in order to rectify the abnormality would open the doors of Ghana again to the British, the Americans and other foreign nationals to gang-rape our oil and gas resources in the name of investment as happened to gold, diamonds, etc.

We feel sad and sorry for you young men and women who belonged to these sponsored, lobby organizations for your actions, not mindful of the harm you are causing to your own country. But do not forget your actions would never be lost on your Karma.

Mr. Solomon Kwawukume
Senior Research Officer, Oil & Gas

Mr David Agbee
Executive Director