The government has taken a giant step to create an attractive environment for potential investors to participate in the country’s hydrocarbon industry by providing certainty and transparency in the ground rules for operations.
This follows the passage on Friday by Parliament of the Petroleum (Exploration and Production) Bill, 2016 which provides for “open, transparent and competitive public tender processes,” preceding the entering into of a petroleum agreement.
According to a release signed by the Edward Abambire Bawa, Head of Communications of the Ministry of Petroleum, the petroleum industry in Ghana had entered a new phase with the discovery of larger commercial quantities of oil and gas in deepwater offshore adding, “it has become evident from these challenges that the current legal and regulatory framework governing the industry is not robust to counter the challenges.”
The Bill, which replaces the Petroleum (Exploration and Production) Law 1986, PNDC law 84 had been laid in Parliament some years ago, but had been withdrawn by the then Majority Leader and Member of Parliament for Zebilla, Cletus Avoka, for further consultations.
This was after some industrial players and other civil society organisations had raised concern about some provisions in the Bill.
The new bill according to the release from the ministry had been expanded to include the requirement for the minister responsible for petroleum to publish an invitation to tender or an invitation for direct negotiations in the Gazette and at least two state owned national newspapers or any other medium of public communications.
“The overarching principle that the management of petroleum resources should be conducted in accordance with principles of good governance and transparency, for maximum benefits of Ghanaians is a theme that runs through this Bill,” the release said.
Under the Bill, the Petroleum Commission is required to establish and maintain a petroleum register of petroleum agreement, licenses, permits and authorisations and the register shall be open to the public.
It also introduced an obligation to commit a contractor who fails to fulfil either in whole or in part, the minimum work obligation agreed under petroleum during the exploration period to pay to the Ghana National Petroleum Corporation the amount required to complete unfulfilled portions of the work programme for that working period.
Similarly, the Bill imposes an obligation on person carrying petroleum activities to ensure that Ghanaian citizens, with the requisite qualifications in categories and functions as prescribed, are employed and also prepare and implement training programmes for Ghanaian citizens in all aspects of petroleum activities.
Persons engaged in petroleum activities shall acquire materials, equipment and consumer goods produced or provided for in the country by an indigenous Ghanaian company of similar quality and cost to foreign material or goods.
“They are also required to contract local service providers to the extent that the services they provide are similar to those available on the international market,” the release said.
According to the release, the petroleum industry would be significant sources of revenue for the government in the form of royalties, income and capital gain tax, participation interest and bonuses.
“The provision of the Bill seeks to consolidate these sources of revenue into law rather than to leave them to be a subject of negotiations in petroleum agreements,” it said.
“Revenue so derived, will support the nation’s industrialisation and growth strategies, whilst creating jobs for Ghanaians, thereby contributing significantly towards the alleviation of poverty,” it added.
By Times Reporter