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ACEP Cautions Government On Bad Precedent Of Direct Negotiation

The Africa Centre for Energy Policy (ACEP) has taken note of government’s effort to inject greater transparency into the award process for Petroleum Blocks and finds it commendable. This milestone is the result of a long journey of considerable engagement since 2013 when a more progressive draft of the Petroleum (Explorations and Production) Bill became available to the public.

The consultative processes over the period ensured that many concerns of stakeholders were addressed in the Bill before its passage into an Act of Parliament in August 2016 (Petroleum (Explorations and Production) Act, Act 919).

This year, the Ministry of Energy has accelerated the processes to operationalize the transparency requirements of the Act to ensure that the key requirement for open and competitive bidding for petroleum blocks is not deferred and public access to Petroleum Agreements (PAs), is not restricted.

In January, the ministry launched the Petroleum Register which has become the repository of all PAs, Permits and Authorizations. Subsequently the Licensing Round Committee was established to operationalize the licensing requirement in the Act 919.

The Ministry also drafted, engaged stakeholders and submitted the Petroleum (Explorations and Production) (General) Regulations to parliament which was passed in August this year. The regulations meet significant transparency benchmarks including the provisions for the publication of Beneficial Ownership (BO) of companies Ghana enters into PA with.

This makes Ghana the first in ECOWAS and the second in Africa to have legislated BO disclosure requirements in the Oil and Gas sector. These are commendable efforts to ensure that PAs provide optimal benefits to the country.

However, ACEP in a release signed by Benjamin Boakye, its Executive Director and copied to Newsghana.com.gh said, it is worried about the almost mathematical application of the Act 919 to reserve some blocks for direct negotiations. Section 10 (3) of the Act provides thus; a petroleum agreement shall only be entered into after an open, transparent and competitive tender process.

To us, this constitutes a default prescription by the Act for entering into a PA and is obviously superior to the discretionary deviation provided in section 10 (9) which states; Despite subsection (3), the Minister may, in consultation with the Commission, determine that a petroleum agreement may be entered into by direct negotiations without public tender, where direct negotiations represent the most efficient manner to achieve optimal exploration, development and production of petroleum resources in a defined area.

This does not mean that both provisions should be implemented concurrently as the ministry is seeking to do. If there are reasons that justify the exercise of discretions in section 10 (9), those reasons should have been adduced at the time of the announcement to prevent speculations on why the ministry decided to carry out direct negotiations.

ACEP will continue to monitor the implementation of the Act 919 and the award processes initiated by the government to ensure there is satisfactory compliance with the transparency requirements of the law. Particularly in relation to the blocks earmarked for direct negotiation.

Section 10(6) of Act 919 requires that “the Minister Shall publish invitations to tender or an invitation for direct negotiations in a gazette and two state owned daily newspapers and may publish the invitation in any other medium of public communication”. This is an important indicator that will be monitored.

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