Plans are far advanced for Ghana’s National Oil Company, the Ghana National Petroleum Corporation (GNPC), to acquire stakes in a number of oil companies and assume its role as a national operator in the upstream sector. However, to effectively make meaningful progress, this requires the adoption of a long-term national development plan.
This marks a new phase in the development of the country’s oil and gas sector, and a national plan is very crucial at this time. This is because the country appears to be racing against time and needs to hurriedly make moves to realize maximum benefits from its oil resources while it lasts, otherwise these assets risk getting stranded.
Currently, public discussions have centered around the possible acquisition of a 37 per cent stake in Deep Water Tano/Cape Three Points (DWT/CTP) operated by Aker Energy Ghana Limited and 70 per cent stake in the South Deep Water Tano (SDWT) operated by AGM Petroleum Ghana Limited.
New acquisitions underway
This notwithstanding, new considerations on the current subject indicate that the government is making plans to acquire stakes in Springfield, even the Jubilee and TEN fields, the Minister of Energy, Matthew Opoku Prempeh notes.
“It is not only Aker; I do know that there is an intention to go into Aker, there is an intention to go into AGM, there is an intention to go into Springfield and even the Jubilee field and TEN Field…
“If the government is going to support you 100 per cent, it means that this seven-member board must be up and running with all the responsibilities to ensure that Ghanaians enjoy.”
Dr. Matthew Opoku Prempeh, Minister of Energy
Dr. Kwabena Duffour, a former Minister of Finance and Economic Planning and the founder and President of the Institute for Fiscal Studies-Ghana is also sighted to have indicated that the country needs to manage its petroleum sector to maximize the benefits thereof.
“We haven’t moved away from the colonial arrangement. So, we still have agreements which favor those who are in this particular sector. We haven’t had the courage, and we should have the courage to take over what is ours.”
Dr. Kwabena Duffour, founder and President of the Institute for Fiscal Studies-Ghana
Need for national development plan
Looking into the past, our discovery of oil and the subsequent exploration and development reverberated mixed feelings across the country. On the one hand, considerations were for the country to maximize returns from the resource to accelerate economic growth. On the other hand, the dislike of the idea that Ghana will end up with an oil resource curse characterised debates.
While at that phase, several laws were enacted including the Petroleum Commission Act, 2011 (Act 821) and the amended Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), albeit the development of a nuanced long–term national plan has been lost in the picture. Thus, what the country had feared (a resource curse) appears to be playing out— the problem of poverty remains of topmost concern despite the abundance of resources.
For instance, Section 21(2)(d) of the Petroleum Revenue Management Act (PRMA) clearly states that any use of the Annual Budget Funding Amount (ABFA) should be guided by a medium-term expenditure framework, which must align with a long-term national development plan approved by parliament.
However, this has not been realized and therefore management of the ABFA fund has come into question by sections of the public. Even so, this lack of a national development plan and a commitment therewith is a possible reason for the delay in the National Oil Company’s participation in the upstream sector as an operator.
While the acquisition of majority stakes is a good move and should be encouraged, the government should not be swayed by ‘adrenaline’ to only focus on maximizing its benefits from acquiring these stakes. This is a new phase of the country’s oil sector, and should tread cautiously through effectively developing a long-term national development plan for this cause.
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