Parliament is to decide on whether or not a fresh proposal from the Executive that the Minister of Petroleum becomes the final determinant of who gets an oil contract in the country should be struck out or maintained in a new petroleum Exploration and Production (E&P) Bill that is currently before the House for its perusal.
Sections of the bill, which was approved by Cabinet earlier this year, provide that notwithstanding the outcome of a competitive bidding process for a particular oil contract, the minister can determine who is best suited for that contract, a provision the Parliamentary Select Committee on Mines and Energy says needs to be looked at again.
Its Chairman, Mr Cletus Avoka, said in an interaction with journalists in the Malaysian capital, Kuala Lumpur, that the role of the minister in awarding contracts was one of several “grey areas” in the bill that the members of the committee were currently working at deciding before forwarding it to the entire House for passage into law.
“The bill provides that notwithstanding the competitive bidding that someone may emerge from as the best bidder, the minister, in his good judgement, can decide to give the contract to somebody else. Now, that is a challenging area; it’s a grey area that we have been trying to explore on what to do,” Mr Avoka, who doubles as the NDC Member of Parliament for the Zebillah Constituency in the Upper East Region, said.
The position Parliament will take on that draft provision will be of interest to stakeholders in the oil industry, given that its inclusion has generated debate among them.
The African Center for Energy Policy (ACEP) flagged that provision in its recent publication, an advisory report on the new bill, as one of the issues that needed further clarification before the bill could be passed into law.
Additionally, it said the provision gave recipe for abuse of power, given that it does not include why the outcome of a competitive bidding process must be ignored.
“Without justifying why an open tender is ignored in a public notice, the potential for abuse of the process is high,” ACEP said in the document.
Tapping global experiences
The interaction on the bill with the media in Malaysia was on the sidelines of a capacity-building trip to the offices of Petronas, the Malaysian national oil company (NOC).
The trip was at the instance of the Ministry of Petroleum and the Ghana National Petroleum Authority (GNPC) for members of the select committee, a select journalists and staff of the two institutions.
It came on the back of similar ones to Trinidad, Tobago and Norway aimed at giving the members firsthand information on the legal environment that promotes the establishment and growth of strong NOCs, the equivalent of GNPC.
Petronas, which was established in 1974, currently operates in all three sectors of the petroleum business, including overseas, where it owns and operates dozens of oil blocks.
Its asset base totalled about US$94 billion as of December 2014, the company’s financial statements showed.
Commenting on the influence and expertise of Petronas after interacting with its officials, Mr Avoka said the company was a success story that must be emulated by all.
“I was happy and amused to know that they pay royalties, taxes and dividends, among others, yet contribute 40 per cent to the budget of the country every year.
“That is a great achievement,” he said, noting that the company was able to achieve that success due to their resource base.
“You cannot give what you do not have. So if GNPC wants to raise US$700 million loan and the walls of Ghana must come down, then they cannot operate, they cannot diversify and they cannot grow. The law must be liberalised in a way, if we want them (GNPC) to be competitive in the oil industry,” the MP said to signal that the committee might ask for more powers for the corporation to enable it to operate as a commercial entity.
Although Mr Avoka could not tell when the bill would be passed into law to replace the existing E&P law, 1984 (PNDCL 84), he said the committee was looking at finishing its work on the bill latest by August this year, after which it would be passed on to the entire House for debate and passage.