The Business Analyst?s Writes To ‘All-Knowing? Franklin Cudjoe

Franklin Cudjoe
Franklin Cudjoe Of IMANI

Dear Franklin
When on March 6, 2013, we carried an article titled: Tax Revenue From Ghana?s Oil: FRESH ISSUES OVER E.O. GROUP TRANSACTION, we were first taken aback by your unwarranted attack on the paper, wondering what might have eaten you up to post comments such as you posted.

The story, which was a direct report based on the latest report by the Ghana Extractive Industry Transparency Initiative (GHEITI), on the country?s Oil and Gas revenues, highlighted a direct request by GHEITI to the Ghana Revenue Authority (GRA) to pursue the issue of capital gains tax on the Tullow Oil Plc acquisition of the E.O Group?s1.75% equity in Jubilee in 2011 and other such acquisitions to its logical conclusion.

The report had stated that following that transaction, even though the GRA had issued a ruling that the transaction was subject to tax, the aggregator did not come across any revenue from capital gains tax on the transaction.

The Petroleum Revenue Management Act, Act 815 section 6(e) indicates capital gains tax derived from the sale of ownership of exploration, development and production rights as a possible receipt for the petroleum holding fund.

For the benefit of our cherished readers, we reproduce below your posting which clearly shows how ignorant you are, and instead of spending time to learn you continue to inflict your ignorance on unsuspecting members of the public, with your noise and heat.

You wrote the following:
?And here we are all a newspaper calling itself a business newspaper can rant as reasons for the dwindling tax revenues from our oil is lay the blame at the door steps of business men who just got their cut by introducing the jubilee partners to Ghana…..every serious business- minded journalist knows the fall in revenues was due to technical problems tullow faced, even though they and the GNPC were quite economical with the truth..very awful journalism….very awful analysis….that word Analyst should never be part of its name…?
First we thought probably you played on an assumption that the subject of the story was about corporate tax. However, when after our editor sought to enlighten you by posting the story on your wall, rather than apologising for the benefit of the new knowledge provided, you went ballistics.

Franklin, it became clear that true to your character, you continued along that reckless path with unwarranted postings even though you had no clue about the subject matter that you were attacking.
It was unambiguous that the article in question was neither an opinion piece nor an essay presented as an analysis as you and your IMANI often do, but a simple, straight-forward report based on a Ghana Extractive Industries Transparency Initiative [GHEITI] publication.
It did not take long, however, for you to reveal from another posting that what you posted was predicated on malice aforethought, through a posting on facebook in response to a comment in the words: ?may I remind you that this business analyst has in the past done far worse with running IMANI down…..?.
This was in apparent reference to a publication by this paper in the past, which exposed you to the public in your attempt to pull a fast one on it by suggesting that IMANI had been voted the best think-tank in Africa, in a ranking that had another Ghanaian advocacy group and others on the continent ranked ahead of you.
Exposing your lies for crowning yourself with an imaginary glory, through deception, was for us unbecoming of any serious group and the people of Ghana deserved to know.
After attempting to infect the editor and visitors to your facebook wall with your warped interpretation of the story, you proceeded to advise the editor, in the words: ?My brother take the paper off the shelves and do a proper analysis than this skin pain vacuous witch hunt…..en FAA taaaa mu kroaaaaa?
You posted also during the exchanges with our editor on facebook that every businessman you know doesn?t ?RESPECT? The Business Analyst, adding that ?it is a waste reading that tabloid.?
As believers in free expression, we have no problem with the number of voices that want to be heard. And it is for this reason that articles by you and some of your other colleagues at IMANI found space in The Business Analyst, under our former Managing Editor, who also as editor of The Chronicle newspaper in the past, published your articles.
Franklin, over the last few years, we have watched and listened to you in amusement, as you and your colleagues at IMANI scramble over each other to capture the headlines, with postulations on issues from archaeology to zoology.
We have no problem at all with anybody seeking public attention, especially when they are in a business where their sponsors must hear them loud or see some write-ups to earn them a living.
Think tanks, all over the world engage in research and advocacy in areas such as social policy, political strategy, political risk, the economy, the environment, science or technology, industrial or business policies, or security.

Credible think tanks influence public opinion and public policy, and support their conclusions with credible empirical data, which help decision makers.

However, what we see of you is complete pettiness and direct attacks on individuals, institutions, and everything that comes your way, in a ?Mr. Know-It-All,? making you ?B-a-d Company? for Ghanaians!

It might interest you to know that the motivation that kept The Business Analyst on the news stand was the very positive and encouraging feedback we got from industry players both home and abroad, many of whom we had never met.
Unlike you and your IMANI, who want to hear your voices, sounding authoritative on every subject matter on earth, The Business Analyst has remained focused and industry players in the oil and gas sector, who know what the real issues are, do value it dearly.
You might conduct a google search to locate an article published by our former Managing Editor, J. Ato Kobbie, titled: ?Jubilee Oil – Why Ghana Won?t Get Tax For 3-Years?, and find a lot to learn from that piece to conclude that you owe the paper, its publishers and founding publisher-Managing Editor, an apology for those unwarranted and reckless comments you put out there.
Background
In April, 2010, The Business Analyst was born, not to indulge in praise-singing, but to tell the story of Ghana?s oil as it ought to be told ? with the national interest as paramount!
It recognised the uneasy task it had set for itself in a country where political news, especially, those bordering on sensationalism, appeared hottest in demand. Obviously, a business newspaper focused on an industry that not many people had sufficient appreciation of, was certainly not going to be easy.
These notwithstanding, The Business Analyst has stayed the course, focusing on what, together with the editorial team, believed to be the real issues that will bring to the Ghanaian people, our readers and the oil and gas industry, the maximum benefits.
From the first edition that introduced our readers to the legal regime governing the petroleum industry, with Paolo Scaroni of ENI?s profound piece rightly identifying the owners of natural resources, the paper published in its second edition all the varied opportunities that the advent of large commercial production of oil presented to Ghanaians.
The third edition had Alhaji Asoma Abu Banda, who had lived in Nigeria at the time that country started producing oil in the 1950s, warning Ghanaians against ?The Dutch Disease?.
The rest is history.
Franklin, your effusions would have been treated with the contempt that it deserved, but for those gullible Ghanaians who might get hoodwinked by your over-hyped international exposure to take your words as gospel truth.

Franklin, you claimed in one of your comment that your posting was your attempt at dealing with media terrorists, in your words: ?trying to dismember that precociously terroristic media behavior exhibited by many down here…., I worked and still work with over 50 media allies just in Africa alone and trust me, this type won’t rate beyond the Gulf of Guinea.?

We welcome constructive criticisms aimed at bringing out the best in the media, which has raised your profile, by giving you space. But attacking a newspaper and calling it names for reporting what is factual is certainly not one of the works of a think tank.

That The Business Analyst is a valuable paper is not in dispute as that is best attested to by the fact that our new publishers find it a worthy paper to invest in.

Finally, we ought to remind you, your sponsors and all readers that simply because you call yourself a think tank doesn?t make you one.
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We reproduce below the original story of last week and also our publication, explaining the reasons for revenue shortfall.

Tax Revenue From Ghana?s Oil
FRESH ISSUES OVER
E.O. GROUP TRANSACTION

By Tommy Ekpe

The Ghana Extractive Industry Transparency Initiative (GHEITI) has asked the Ghana Revenue Authority (GRA) to pursue the issue of capital gains tax on the E.O Group?s 1.75% equity sale in the Jubilee partnership, and other such acquisitions to their logical conclusion.

Tullow Oil Plc. acquired the E.O. Group Limited interest in the West Cape Three Points [WCTP] block, in 2011, with the GRA issuing a ruling that the transaction was subject to tax.

However, in its final report on the reconciliation of oil and gas sector payments and receipts: 2010-2011, GHEITI said the reconciler did not come across any capital gains tax on the transaction.

The Petroleum Revenue Management Act, Act 815 section 6(e) indicates capital gains tax derived from the sale of ownership of exploration, development and production rights as a possible receipt for the petroleum holding fund.

GHEITI has therefore recommended the streamlining of the legislation on capital gains tax to ensure that such transactions bring benefits to the country.

Tullow Oil plc, on July 25, 2012 announced the completion of its earlier announced acquisition of the Ghanaian interests of the EO Group Limited for $305 million, having satisfied all of the conditions related to the transaction.
Tullow gave the effective date of the transaction as December 1, 2010, thereby increasing its interest in the West Cape Three Points license offshore Ghana by 3.5% to 26.4% and the Group’s interest in the Jubilee field, which it, by 1.75% to 36.5%.

GHEITI also called for the harmonization of the Petroleum Income Tax Law (PITL) and the Internal Revenue Act, Act 2000, saying there is no provision in the PITL that relates to excessive interest charges even though interest expense is generally deductible in determining the chargeable income for corporate tax purposes.

It said there was the risk that taxpayers may use unlimited interest payments to strip profits, resulting in lower corporate tax payments while Section 41 of the PITL, 1987 provided that without express exemption of a contractor from taxation, the general law or provisions thereof relating to taxation may apply.

On losses carried forward, the report said tax losses under the PITL are carried forward indefinitely, adding that under the IRA, ACT 2000, the losses are carried forward for only five years for mining operations. It said the practice under the Income Tax Law, however, was that capital allowances did not create losses and are carried forward indefinitely.

GHEITI therefore recommended that tax losses are carried forward for five years in the petroleum industry as pertains in the mining industry.

?The practice of carrying forward capital allowances indefinitely in the mining sector may also be extended to the petroleum industry?, it said.

Touching on ring-fencing, which refers to the limitation on consolidation of income and deductions for tax purposes by the same taxpayer for different projects or activities, the report said ring-fencing legislation had been passed, under the Internal Revenue (Amendment) Act, 2012, ACT 839, to disallow the deduction of expenses exclusively incurred in a mining area against revenue derived from another mining area belonging to the same taxpayer or in which the taxpayer has an interest in the determination of chargeable income.

Currently, the petroleum industry does apply ring fencing to contracts. However a contractor may set of expenses that are exclusive to a production area against income from another production area and this may delay corporate tax revenues.

GHEITI therefore recommended that a legislation similar to the amendment on ring fencing in the mining sector should be introduced in the petroleum industry to production areas.

?As many fields commence production, ring fencing legislation is needed to ensure early corporate tax receipts? it said, but added that it should however be viewed against the need to obtain more geological data from greenfields.

On capacity building, the report said since the oil and gas sector is an emerging industry in Ghana with only few members of staff engaged in the petroleum sector at the GRA, Ministry of Finance and the Bank of Ghana, there was the need to increase the numbers and speedily build up the capacity of officers of all the agencies involved to enable them carry out their functions efficiently and effectively.

National Health Insurance Scheme Is Seeing Better Days

By Tommy Ekpe

The introduction of a Consolidated Premium Account to collect payments made at the scheme level into one composite account has led to greater accountability and improvement in the efficiency of the National Health Insurance Scheme?s financial operations.

Prior to this measure, about 70 percent of premiums collected were not properly accounted for.

The scheme is, therefore, better organized and better managed than what was met by the current administration in 2009, contrary to claims by the New Patriotic Party (NPP)?s flagbearer at the IEA debate on 21st August, 2012 that the NHIS was ?collapsing,? which he later amended to ?collapsed?.

At the IEA Encounter, the NPP standard bearer, Nana Akufo-Addo, said a certain Esenam from Vakpo told him that the scheme had broken down. Hear him: ?NHIS Egblen?, he reported.

What is not clear is whether one could generalize a challenge confronting a scheme in one district and interpreting it to mean that the whole scheme is broken down, that is, if it?s really true that one Esenam exists in Vakpo and actually told Nana Addo this.

Meanwhile, available records, backed with empirical evidence on the ground, clearly show that since the current administration took over management of the scheme, giant strides have been made, putting the scheme in a better shape and condition than what it came to meet.

A few examples will suffice. Before 2009, the schemes operated as 145 autonomous entities limited by guarantee with their own individual Boards.? This autonomy resulted in the lack of accountability leading to multiple corruption points in the system, including collusion between scheme staff and service providers to game the system.

Audits conducted in 2010 revealed the scale of the malfeasance and malpractices including falsification of records to inflate attendance at healthcare facilities; over-billing for services rendered to NHIS patients e.g. routine observation recorded as admissions in order to take advantage of higher tariffs; over-prescription of medicines (for profit); and abuse of the Free Maternal Care Programme e.g. claims for caesarean sections that were never carried out, or for deliveries that never took place.

 

There was also the lack of capacity, resulting in perfunctory and inefficient claims vetting which caused financial loss to the scheme, as well as inefficiencies and low productivity in other areas of scheme operations.

With a non-existent Human Resource Department there was complete discord and inadequacies in management structure.? There were no Directorates for Strategy, Corporate Affairs, Claims Management and Internal Audit, leading to improper coordination and non-adherence to any strategic plan.

The problems are not over. Poor Financial Management, Record Keeping and Data Management rendered the scheme inefficient succumbing under the weight of inadequate Financial Accounting and Reporting System.

With no Accounting Ledgers on Investments, cash collections were short-banked and unaccounted for coupled with poor fixed assets management.

These are not all. It was realized that most of the offices, including the Head Office and Regional Offices, were operating from rented accommodation at a cost

There were also shortcomings in Stakeholder/Subscriber Issues Management with its attendant lack of effective structure for resolving difficulties, queries and complaints of subscribers. A dedicated Contact Centre was absent. Delays in claims re-imbursements, in some cases between six to 12 months, were the norm.

Enter a new administration and the story began to change and still improving tremendously.? An Internal Audit Division was established and all 145 district schemes audited since 2009 to ascertain the financial status of the NHIS. Those found culpable for malfeasance appropriately sanctioned. The audits have instilled financial discipline in the schemes and is playing pivotal role in reforming the NHIS and uncovering malpractice.

There have been vast improvements in claims management with the establishment of a state-of the?art Claims Processing Centre (CPC). It has improved the claims processing turnaround time and minimised delays in reimbursements. Claims reimbursements schedule for properly submitted claims has been reduced from up to nine or more months in the past to 60-days barring hiccups in the flow of funds. There is a unit dedicated to NHIS Fund and Investment management.??

The NHIS Call Centre is the first of its kind in the West African sub region. The Call centreaddresses issues, enquiries and complaints of NHIS subscribers and other stakeholders promptly. It is designed to deepen the partnership between the NHIS and its stakeholders, particularly subscribers.

With the introduction of a Call Centre, management/policy makers can now afford to pool complaints and will now be armed with data on subscriber issues to be able to assess the impact of interventions and originate? informed ideas and policies to improve the scheme altogether.

 

There is more. Reforms in the Provider Payment System with the piloting of Capitation for OPD services in Ashanti Region which, despite initial difficulties, is providing useful lessons and informing plans for a possible country-wide scaling-up in 2013.

Capitation has the potential to improve quality of care through improved doctor-patient relationship, ready access to medical history of patient, and competition between providers for clients.

Enrolling subscribers to their chosen healthcare facilities helps eliminate frivolous misuse of healthcare though provider-shopping and assist in maintaining the Referral system.

It is sure bet that advance payments to healthcare facilities eliminates delays in reimbursement to providers and makes it possible for forecasting and budgeting.

There has been a massive upgrading of the ICT system through the creation of an ultra modern data centre.

A new Head Office building was constructed as well as Regional office buildings in all 10 regions.

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The completion of the necessary processes for electronic linking of diagnosis to treatment to facilitate electronic claims processing and inject speed and efficiency into the NHIS claims management and payment system is another plus.

The Financial Administration has improved leading to better financial management, accounting and reporting system as well as improved record keeping and data management.

Cooperation and collaboration with key Stakeholders and Development Partners have been stepped up. Examples – Medium Term Strategic Plan drawn up with Stakeholder input. Capitation Technical Sub-committee constituted by representatives of key stakeholder institutions

It is gratifying to note that the profile of the NHIS in the global arena continues to rise. It has become a favourite destination for delegations from foreign countries and institutions seeking to learn from Ghana?s experience, just as the NHIS also learns from best practice around the world.

The study tours confirm the status of Ghana?s NHIS as an emerging model for countries in the Developing World and beyond and a hub for knowledge and experience sharing.

The international interest and confidence in Ghana?s health insurance scheme has generated offers of partnership and support from abroad (USAID & South Korea).

In November 2010, the NHIS won the UN award for excellence. It was cited by the United Nations at the Global South-South Development Exposition in Geneva, Switzerland for showing leadership in health insurance implementation in the developing world. The criteria for the award included: Leadership, Innovation, Knowledge-Sharing, Creativity, Local Initiative, among others

That is not all. To deal with emergent structural challenges in the Scheme, the revision of the law governing the NHIS, currently before Parliament, is aimed at correcting structural and systemic difficulties in the scheme?s administration. A new governance framework for the administration of the schemes is about to be introduced. Under the new law the 145 DMHISs become a consolidated unitary NHIS. This would enhance accountability and make for more effective governance of the schemes. With the review come new opportunities for staff progression

There have been training programmes for staff, improvements in remuneration, collective bargaining agreement reached with local Union over proper framework for negotiating staff salaries and Conditions of Service and the creation of opportunities for staff progression. Staff are also encouraged to broaden/ upgrade their skills and qualifications. This has led to a considerable boost in staff morale.

A Clinical Audit Division has also been established which is instrumental in promoting the quality of health care by uncovering, reporting, and correcting sub-standard/ poor healthcare practices. In fact, Clinical Auditing of some selected healthcare facilities has led to the recovery of more than GHC18 million in false claims.

Clinical Audit has also brought various malpractices to the attention of management. Such information feeds into reform initiatives which are driving change in the NHIS. Clinical Audit also has a deterrence effect on fraud/ abuse by service providers. The probability of inspection by the audit team tends to deter blatant malpractice in many facilities. Healthcare facilities are cleaning up their act as a result of Audit findings.

It is a fact that there has been massive growth in NHIS membership and the evidence is there for all to see. That notwithstanding, mass registration exercises continue to be conducted across the country to further expand coverage, particularly of the poor and vulnerable, which would lead to increase in utilization of healthcare.

The NHIS, no doubt, is seeing better days and despite the numerous challenges it has to confront and still confronting, it would strive to surmount them and become one of the best, if not the best, of health insurance schemes in the world. The NPP and Nana Akufo-Addo should come again.

This article was originally published in The Business Analyst of Wednesday, 29th August ? Tuesday, 4th September, 2012. E-mail:[email protected]

Agenda to Cut Back GNPC Funding

IT IS BACKWARD!

?Says Energy Ministry?

.. Describes intent as amounting to ?Robbing Peter to Pay Paul?

By J. Ato Kobbie, Managing Editor

The Ministry of Energy has dismissed the New Patriotic Party?s flagbearer, Nana Addo Dankwa Akufo-Addo’s proposal to divert oil revenue allocations from the Ghana National Petroleum Corporation (GNPC) to fund his proposed ?free secondary education,? describing it as irresponsible populism.

?When countries are strengthening their national oil companies to be the cash cows of their economies, it is strange that the NPP flagbearer is proposing the country goes back 20 years,? Mr. Buah wondered, saying, ?NPP is trying to gain cheap popularity and confuse the public by suggesting that investment in national Oil and Gas capacity is somehow the enemy of educational development.”

Speaking to The Business Analyst in Accra over the weekend, the Deputy Minister of Energy in charge of Petroleum, Hon. Emmanuel Armah-Kofi Buah, said now that there is a national consensus that GNPC becomes lead Operator in order for Ghana to increase its revenue and other dividends from oil, the last thing that anyone can talk about is cutting down the funding that is required to fund such operations.

Mr. Buah, who is also the Member of Parliament (MP) of the Ellembelle Constituency in the Western Region, said participating in oil exploration, development and production comes with an obligation to contribute to the costs during the process.

?Without these contributions the bulk of revenues that are currently being received would not be earned,? he added.

He said, for example, in addition to GNPC contributing 13.62% of the cost of producing the Jubilee Field, the national oil company would soon be required to contribute five (5) percent of the cost of developing the Tweneboa, Enyera and Ntomme (TEN) project, and subsequently, 15% of the production cost.

?We agree that oil revenue must contribute to funding the development of the country, including the area of education; however, if you want to do that the best approach is to fund GNPC to increase its stakes in oil blocks to take the commanding heights of the production process, and to strengthen the sector to ensure that the bulk of the revenue comes to Government, instead of going to international oil companies,? Mr. Buah argued.

For him, it is only when this is done that there will be enough and sustained revenue inflow to fund education, among other needs of the country.

?The flagbearer?s mantra of ?a belief in Ghana and the Ghanaian? appears to be inconsistent with his current stance on Ghanaian ownership and leadership of this burgeoning industry and in complete disregard for the responsibilities that come with such a vision,? he stressed.

The minister said the programmes and budgets of GNPC are always submitted to the Minister of Energy, who in collaboration with the Minister of Finance and Economic Planning submits it to the 230-member Parliament, which has over 100 members of the NPP, for approval.

He expressed regret that Nana Addo and the NPP are taking cheap shots at an important national commercial organization, which cannot defend itself against a partisan attack and cautioned politicians against undermining national institutions just to win power. He warned that the NPP’s real agenda is to weaken national institutions to create room for the kind of dubious deals that characterized the Kufour Administration.

He said the last time NPP was in power they almost destroyed GNPC by closing down some of its key departments.

?They closed down its drilling, marine, aviation, marketing and even corporate affairs departments so that when we finally found commercial oil as a result of the long-term planning and investment began under the PNDC, we were in a relatively weak position,? he elaborated, adding that ?today, civil society is asking why GNPC does not invest in owning assets to lower operational costs and increase national returns.?

He said the country has a long way to go to get back on track and this will require investment and therefore ?the last thing that anyone should be thinking about is disinvesting in GNPC.”

The NPP flagbearer had said during his turn at an Institute of Economic Affairs (IEA) Encounter with 2012 Election flagbearers that he was going to take a percentage of oil funds allocations to the national oil company to fund his proposed ?free secondary school? agenda.

This article was originally published in The Business Analyst of Wednesday, 29th August ? Tuesday, 4th September, 2012. E-mail: [email protected]

Rate of Inflation Slower Than Expected – Renaissance Capital

By Tommy Ekpe

Findings on Ghana?s current economic outlook by Renaissance Capital, a leading independent investment bank of the Renaissance Group, reveals that the acceleration of the country?s inflation has been significantly slower than expected.

Inflation
Inflation

According to a report issued last week, despite the Cedi?s 30 percent depreciation against the dollar, headline inflation increased to 9.5 % year-on-year (YoY) in July, from 8.4% YoY a year earlier.

While acknowledging that low food inflation has helped keep headline inflation in the single-digit region, it however noted that food inflation has also edged up over the past 12 months to 5.8% YoY in July, from 3.3% YoY a year earlier.

?That said, we expected most of the inflationary pressure to stem from non-food items, particularly from housing and utilities? costs and transport prices, owing to particularly high oil prices in the first quarter of 2012 (1Q12), and from clothing and furnishings, given that a significant share of these goods are imported?, the report stated.

The report observed that non-food inflation only increased to 12.4% YoY in July, from 11.3% YoY at year-end 2012 (YE12), adding that all that pointed to downwardly sticky inflation, which had delayed its return to the double-digit region ?in our view?.

?We think a more stable cedi in the second half of 2012 (2H12), on the back of the raft of policy measures that the Bank of Ghana (BoG) implemented in 1H12, is positive for the inflation outlook?, it said, expecting inflation to however rise into the low double-digit region by YE12, due to the proposed increase in government spending and base effects.

 

On fiscal slippage, the report said it was largely due to wage costs. Elaborating further, it said Ghana has a history of running up bigger-than-targeted budget deficits in election years, particularly in the post-military-rule period, adding that the only exceptions are 2000 and 2004, the year before Ghana qualified for debt relief, 2005, when the authorities worked hard on narrowing the deficit to improve the country?s prospects.

?One of the country?s worst fiscal slippages was during the last election in 2008, when the outgoing New Patriotic Party (NPP) government ran up a budget deficit of 8.5% of GDP, which was significantly bigger than the target of 2- 3% (under the rebased GDP)?, it said.

The current National Democratic Congress (NDC) administration, which inherited a large fiscal deficit, according to the report, was compelled to adopt a fiscal consolidation policy enabling it to narrow the deficit until 2011, when the budget deficit came in at 4.4% of GDP, below the target of 5.1%.

?Given the below-target deficit of 2011 and the NDC administration?s fiscal consolidation credentials, our expectation was that fiscal spending in 2012 would be contained, the fiscal slippage would be minimal and the budget deficit would be close to the target of 4.8% of GDP?, the report stated.

However in July, it said, Finance Minister, Dr. Kwabena Duffuor proposed a supplementary budget of GHS2.6bn ($1.34bn) that would allow for an increase in spending of 1.9% of GDP and a wider budget deficit of 6.7% of GDP. ?According to our estimates, 60% of the supplementary budget will go towards the migration of public sector workers to the single spine salary structure, and the implementation of the base pay increase of 18%. Twelve per cent will go towards debt service costs and 11% to cover the government?s under-recovery of fuel and utility costs. The upside is that public sector workers? migration to the new salary structure is near complete, which should ease future wage cost increases?, it added.

This article was originally published in The Business Analyst of Wednesday, 29th August ? Tuesday, 4th September, 2012. E-mail: [email protected]

BoG Policies Taking Effect ?Says Renaissance Capital

By Tommy Ekpe

A combination of policies implemented by the Bank of Ghana (BoG) has begun taking effect with a retracement of the cedi to 1.94 per dollar from mid-August, Renaissance Capital, a leading independent investment bank of the Renaissance Group, has observed.

According to a report authored by the group and released on august 20, 2012, in order to stem what the BoG viewed as speculative activity in the interbank forex (FX) market that was exacerbating the cedi?s weakness, the Bank implemented measures that would ultimately stem cedi weakness, including hiking the policy rate by 250 bpts YtD, reducing the limits on net open FX positions of banks, reintroducing BoG bills to provide additional avenues of cedi investment, revising the application of the statutory reserve requirement so that banks would need to maintain the mandatory nine percent reserve requirement on domestic and foreign liabilities in cedis only, and requiring all banks to provide 100% cedi cover for their offshore account balances ? to be maintained at the BoG.

?We have noted the retracement of the cedi to 1.94/$1 from mid-August, suggesting that a combination of the aforementioned policies may be taking effect. However, as it is still a few months to elections, we project some further weakness to GHS2.0/$1 at year-end 2012 (YE12)?, it said, adding that ?we are of the view that financial outflows increased significantly during this period, particularly short-term money?. It further said while it had expected an increase in financial outflows as the December elections approached, it had not anticipated them to begin so early in the year.

The report noted that the BoG?s 250-bpt hike of the policy rate in the first half of 2012 (1H12) to 15% was largely intended to stem cedi weakness, adding that although the cedi may have stabilized and retraced since August 8, ?we still think the risk of a weakening cedi is significant as we approach the year-end 2012 (YE12) elections?.

It said along with inflationary pressures from an increase in government spending in the order of two percent of GDP and strong credit growth of 39.4% YoY in May, compared to 18.5% YoY a year earlier, this implies that the risk to inflation is definitely to the upside.

?We think these factors will compel the BoG?s monetary policy committee to tighten by 50 bpts to 15.5% when it next meets on September12?, it said.

The report further stated that Ghana?s economy expanded by a sizeable 14.4% in 2011, its first full year of oil production, and continued to exhibit strong growth in the first quarter of 2012 (1Q12) when it grew by 8.7% year on year (YoY), up from 3.0% YoY a year earlier.

It said the double-digit growth in 2011 largely reflects the strong performance of the industrial sector, which grew by 41% in 2011, adding that aside from the extractive sector (mining and oil production) that propelled growth to over 200% in 2011, manufacturing and construction also demonstrated strong growth of 13% and 20%, respectively.

The report however observed that the industrial sector?s performance is masking the underperformance of some significant non-oil sectors, ?in our view?.

?Agriculture, for instance, grew by a weak 0.8% in 2011, and contracted by 2.9% YoY in 1Q12, compared to growth of 5.3% in 2010 and zero growth in 1Q11. Ghana?s statistics office largely attributes agriculture?s underperformance in 2011 to the contraction of the forestry and fishing sectors, and a slowdown in crop production?s growth to 3.7% in 2011, from 5.0% in 2010. This was despite the strong expansion in cocoa production of 14.0%?.

It said reviewing the performance of agriculture?s four subsectors in 1Q12, ?we note that only the fishing sector declined and that crops production, which makes up over 75% of agricultural output, grew by 5% YoY?.

The monetary and fiscal policies at play were the last undertaken by the Monetary Policy Committee (MPC) of the Bank of Ghana, under the leadership of the former Governor, Mr. K. B. Amissah-Arthur, before he became Vice-President of the Republic of Ghana on the demise of former President John Evans Atta Mills.

This article was originally published in The Business Analyst of Wednesday, 29th August ? Tuesday, 4th September, 2012. E-mail: [email protected]

Energy Ministry Flays NPP Over Manifesto-Launch Accusations

By J. Ato Kobbie, Managing Editor

The Ministry of Energy has described as baseless accusations by the New Patriotic Party (NPP) that governance of the petroleum sector had been abandoned since it left office.

NPP
NPP

?GNPC had encroached upon the roles of others, going as far as issuing blocks which should be in the domain of the Petroleum Commission, therefore stifling development in the area,? Mr. Ambrose Dery, MP for?Lawra/Nandom and Deputy Minority Leader had alleged when giving highlights of the NPP Manifesto at the Accra International Conference Center on Saturday, August 25, 2012.

?Besides it has breached the ?no flare? policy for the gas and as a result by the end of 2011 Ghana had lost $2.3billion and has also lost the opportunity of lower electricity tariffs by the use of gas and the possibility of producing gas as a by-product,? Mr. Dery had added.

?Under Nana Addo Dankwa Akufo-Addo, sanity would be restored into the governance and the petroleum resource of the nation would be utilized for the benefit of the people,? he submitted.

But the Deputy Minister of Energy in charge of Petroleum, Mr. Emmanuel Armah-Kofi Buah, says it is regrettable that a political party that wants Ghanaians to entrust it with the governance of the country would be putting in its manifesto, which is its social contract with Ghanaians, plain falsehood.

He described as false Mr. Dery?s assertion that gas from the Jubilee Field was being flared, saying that the gas is being re-injected into the field reservoir and it is only what was technically required to be flared that was being flared.

?Besides, the Ghana National Gas Company (Ghana Gas) was set up in July 2011 to put in place the necessary gas infrastructure, which it is working on assiduously,? Mr. Buah emphasized.

He said contrary to the NPP claim, governance of the petroleum sector had improved and cited the passage of the Petroleum Revenue Management Act (PRMA), the establishment of the Petroleum Commission to regulate the upstream sector, which has left the Ministry to focus on policy issues and GNPC playing the commercial role through the allocation of some of the required revenues.

He said these measures have been put in place to strengthen governance of the sector by introducing greater transparency and ensuring that partners complied with rules and regulations in the sector for Ghana to maximize its benefits from the sector.

?GNPC does not issue licenses for blocks; Its discussions with international oil companies is only in keeping with its legal mandate to partner entities who intend to operate in Ghana,? Mr. Buah said, emphasizing that the role of licensing continues to rest with the Government of Ghana and the Petroleum Commission.

?No blocks can be issued without the final approval of Parliament of which Ambrose Dery is a member,? Mr. Buah concluded, dismissing the claims of Mr. Dery and the NPP.

This article was originally published in The Business Analyst of Wednesday, 29th August ? Tuesday, 4th September, 2012. E-mail: [email protected]

Gas Pipeline Kicks Off September

By J. Ato Kobbie, Managing Editor (Business Analyst)

Construction works for a 110-kilometre onshore pipeline to transport processed gas from Atuabo, in the Ellembelle District of the Western Region to Takoradi to fuel the Aboadze Thermal Power plant, is set to commence by the middle of September, 2012.

The laying of the pipeline is scheduled to commence following the delivery of over 9,000 land pipes by Sinopec to the Ghana National Gas Company (Ghana Gas) in mid-August for the onshore aspect of the project.

Sources close to the project indicate that the construction work will commence simultaneously at about 10 different sites along the stretch of the pipeline route, to ensure speedy completion.

?The project will not be fast-tracked at the expense of quality,? Dr. Joe Oteng-Adjei, Minister of Energy had told the press when inspecting the first consignment of 3,268 pipes in early August.
Dr. Oteng-Adjei had commended Sinopec International Petroleum Service Corporation of China, without whose involvement he said the project could not have reached its current stage, appealing to the Ghanaian counterparts working on the project to keep pace with the Chinese work culture.
Construction of the gas infrastructure, which involves the 110-kilometre onshore pipeline, 45-kilometre offshore pipeline and a 150-million standard cubic feet per day (mmscfpd) capacity gas processing plant, is expected to be completed by the end of the year.
Engineers are expected to employ a horizontal directional drilling (HDD) technique, which means the pipes would be laid under the Amansure River at Atuabo.
Chief Executive Officer of Ghana Gas, Dr. George Sipa-Adjah Yankey, has assured all those to be affected by the project that a fair and adequate compensation would be paid them and warned against any unlawful acts that could affect the timeline of the project.
The Business Analyst has gathered that pipes for the construction of the remaining 45-kilometre stretch of the offshore pipeline from the Jubilee Field?s FPSO Kwame Nkrumah M.V. 21 to Atuabo, together with the gas processing plant to be sited there are under construction in China.
The initial 14-kilometre offshore pipeline from the Jubilee Field was laid in early 2011 by Technip, using its Apache II, pipe-laying vessel.
The project is being funded by a $850-million China Development Bank (CDB) facility contracted by the government of Ghana under a $3-billion facility for upgrading the country?s infrastructure.
In addition the primary objective of fueling the Aboadze thermal plant for cheaper cost of generating electricity, the project is expected to make available liquefied petroleum gas (LPG) as well as form the basis for a fertilizer production in the western region.
Sinopec is managing the construction of the project under an agreement with Ghana Gas.

 

Source:?Business Analyst

 

Buah, Ellembelle District Assembly Challenge Integrity of Report

A coalition report that accused government of abusing its incumbency, has been challenged by the Member of Parliament (MP) for the Ellembelle Constituency, Emmanuel Armah-Kofi Buah, and the Ellembelle District Assembly, over its claims.

In a swift rebuttal to the report, which cited Mr. Buah, among other MPs as having hijacked Common Fund projects of Metropolitan, Municipal and District Assemblies (MMDAS) as personal initiatives and for partisan gains, Mr. Buah accused the coalition, comprising Ghana Integrity Initiative (GII), Ghana Anti-Corruption Coalition (GACC) and Centre for Democratic Development (CDD) of using it to achieve pure partisan objectives.

The coalition accused some government officials in five regions as having abused their office by engaging in political activities on official state sponsored or stage organised programs.
Denying flatly the allegations in the report to The Business Analyst in a telephone interview, Mr. Buah, who is also the Deputy Minister for Energy (Petroleum) said the report was concocted and targeted at the National Democratic Congress (NDC), since it was the only incumbent party.

He expressed surprise that for a report that the group expected Ghanaians to take serious the group did not find it necessary to verify from the Ellembelle District Assembly, which it purports to have funded a market shed at Bomoakpole that he had funded with his share of the MPs common fund.

?In the first place, it was not a new shed built by the Assembly as the report claimed but was started by the community long ago and abandoned in the 1990s due to lack of funds,? Mr. Buah explained.

?I funded the rehabilitation of the market sheds from my own sources, without a penny from the District Assembly,? he emphasized, stressing, ?They got the facts so wrong!?

According to him, the event to handover the project on itself was organized by the chief of Bomoakpole and his elders, sitting in state in full regalia, who had invited him to hand it over to them and thank him for that.

He said the people were excited because their request for the completion of the shed had been pending since 1994, when it was abandoned.

The GHC85, 000.00 project was handed over to the community in the last week of May this year, at a ceremony, where both the Chief of Bomoakpole, Nana Minla Kpanyinli III and the District Chief Executive (DCE) for Ellembelle, Mr. Daniel K. Eshun had thanked Mr. Buah for the project.

Meanwhile, the Ghana News Agency (GNA) reports that the Ellembelle District Assembly, has also refuted the report by the governance institutions that the Bomoakpole market shed project was built with funds from the District Assembly’s Common Fund.

According to the GNA report filed from Nkroful on Monday, Mr. Eshun said the MP for the area, Buah used his lobbying powers to solicit for funds to undertake the project at Bomoakpole.

?Mr. Eshun advised the organisations to do their home work well and correct the wrong perception created out there to deceive the public,? the report continued, adding that ?an MP, who had the development of the people at heart, could move all out, using his influence to present proposals and solicited for funds to initiate projects to improve the living standard of his people.?

The report, under the theme: ?monitoring the abuse of incumbency in the 2012 elections,? covering the period between May and June 2012, cited also Information Minister Fritz Baffour, Brong Ahafo regional Minister, Kwadwo Nyamekye-Marfo, and the Eastern Regional Minister, Ambassador Victor Smith of using their office to campaign.

The report cited also, the New Patriotic Party (NPP) MP for the Abuakwa North Constituency in the Eastern region, J.B Danquah as acting in a potentially corrupting manner by renovating the Old Tafo Presbyterian Church and distributing unregistered motorbikes to some constituents.

The coalition also accused the state-owned media, specifically the print media of giving a higher percentage of coverage to the ruling government as compared to the other political parties.

The project areas were the Sunyani West Constituency in the Brong Ahafo Region, the Avenor-Ave Constituency in the Volta Region, the Ellembelle Constituency in the Western Region, the Cape Coast Constituency in the Central Region and the Abuakwa North Constituency in the Eastern Region.

The report, which was read by the Executive Director of GII, Mr. Vitus Azeem, was based on

research conducted in one constituency each in five regions, namely: Sunyani West Constituency in the Brong Ahafo Region, the Avenor-Ave Constituency in the Volta Region, the Ellembelle Constituency in the Western Region, the Cape Coast Constituency in the Central Region and the Abuakwa North Constituency in the Eastern Region.

The project was supported by Star-Ghana, funded by the United Kingdom?s Department for International Development (DfID), Danish International Development Agency (DANIDA), European Union (EU) and United States Agency for International Development (USAID), and spans February 2012 to January 2013.

The report cited the practice of providing high value gifts to people, including religious and traditional leaders as well as some youth groups, which could amount to ?vote buying?.

 

Source: The Business Analyst?

Gas Pipeline Kicks Off September

By J. Ato Kobbie?

Construction works for a 110-kilometre onshore pipeline to transport processed gas from Atuabo, in the Ellembelle District of the Western Region to Takoradi to fuel the Aboadze Thermal Power plant, is set to commence by the middle of September, 2012.

The laying of the pipeline is scheduled to commence following the delivery of over 9,000 land pipes by Sinopec to the Ghana National Gas Company (Ghana Gas) in mid-August for the onshore aspect of the project.

Sources close to the project indicate that the construction work will commence simultaneously at about 10 different sites along the stretch of the pipeline route, to ensure speedy completion.

?The project will not be fast-tracked at the expense of quality,? Dr. Joe Oteng-Adjei, Minister of Energy had told the press when inspecting the first consignment of 3,268 pipes in early August.

Dr. Oteng-Adjei had commended Sinopec International Petroleum Service Corporation of China, without whose involvement he said the project could not have reached its current stage, appealing to the Ghanaian counterparts working on the project to keep pace with the Chinese work culture.

Construction of the gas infrastructure, which involves the 110-kilometre onshore pipeline, 45-kilometre offshore pipeline and a 150-million standard cubic feet per day (mmscfpd) capacity gas processing plant, is expected to be completed by the end of the year.

Engineers are expected to employ a horizontal directional drilling (HDD) technique, which means the pipes would be laid under the Amansure River at Atuabo.

Chief Executive Officer of Ghana Gas, Dr. George Sipa-Adjah Yankey, has assured all those to be affected by the project that a fair and adequate compensation would be paid them and warned against any unlawful acts that could affect the timeline of the project.

The Business Analyst has gathered that pipes for the construction of the remaining 45-kilometre stretch of the offshore pipeline from the Jubilee Field?s FPSO Kwame Nkrumah M.V. 21 to Atuabo, together with the gas processing plant to be sited there are under construction in China.

The initial 14-kilometre offshore pipeline from the Jubilee Field was laid in early 2011 by Technip, using its Apache II, pipe-laying vessel.

The project is being funded by a $850-million China Development Bank (CDB) facility contracted by the government of Ghana under a $3-billion facility for upgrading the country?s infrastructure.

In addition the primary objective of fueling the Aboadze thermal plant for cheaper cost of generating electricity, the project is expected to make available liquefied petroleum gas (LPG) ?as well as form the basis for a fertilizer production in the western region.

Sinopec is managing the construction of the project under an agreement with Ghana Gas.

 

Source: The Business Analyst

Eni, Ghana Sign MoU for OCTP Gas Dev?t

Eni, together with partner Vitol, have signed a Memorandum of Understanding (MoU) with the Government of Ghana, represented by the Minister of Energy, and the Ghana National Petroleum Corporation (GNPC) for the development and commercialization of discovered gas resources in the Offshore Cape Three Points (OCTP) Block located in the Tano Basin of Ghana.

The OCTP Block is operated by Eni with a 47.222% stake, in partnership with Vitol (37.778%) and GNPC (15%).

Announcing this in a press release on Tuesday, Eni said ?the MoU sets out the key principles for future development of the discoveries and commercialization of the gas within the contract area,? adding that it ?focuses particularly on the domestic gas market, in which Eni and its joint venture partners wish to play a prominent role.?

The signing of the MoU, according to Eni, is in line with its growth strategy in the region and reaffirms the company’s leading position in exploiting indigenous gas resources and contributing to the socio-economic growth of the countries where it operates.

Eni has been present in Ghana since 2009 and currently?operates the two exploration blocks of OCTP (Offshore Cape Three Points) and Offshore Keta.

The signing of the MoU takes place at a time when Sinopec of China, under an agreement with the Ghana National Gas Company (Ghana Gas) is set to commence the laying of onshore pipeline for the transmission of natural gas to be processed by a 150MMscfpd capacity plant at Atuabo in the Ellembelle District to fuel the Aboadze thermal plant near Takoradi.
?Eni has been present in Sub Saharan Africa since the 1960’s and is now operating exploration and production projects in Angola, Congo, Ghana, Gabon, Mozambique, Nigeria, Democratic Republic of Congo, Togo, Kenya and Liberia,? the statement said, concluding that ?with a rapidly growing successful exploration activity, Eni’s current operated production in the region is approximately 450,000 barrels of oil equivalent per day.?

Source: The Business Analyst?

The print version of this article was first published in The Business Analyst of Wednesday, 15th August ? Tuesday, 21st August, 2012. E-Mail: [email protected]

 

Revisiting The ‘Jake Bungalow’ Controversy:

When Judges Emphasise Diferent Facts Of A Case

The majority decision in the case of Samuel Okudzeto Ablakwa & Anor v Attorney General and Jake Okanta Obetsebi Lamptey (“Jake Bungalow Case”) raises intriguing questions about transparency and accountability in the management of state lands.

In this case, the Supreme Court by a 6-3 majority decision held that the Minister of Water Resources, Works and Housing, and the Lands Commission did not abuse their powers relating to the management of public lands, when the Lands Commission “at the request” of the Minister leased a state bungalow located at Ridge, Accra to Hon. Jake Okanta Obetsebi Lamptey. (Hereafter called “Jake”)

The majority decision has attracted both lay and professional commentary (by lawyers). As should be expected, Ghanaians are divided over the soundness of the majority decision. Many feel that the decision chips at the foundation of national efforts to clean up our public administration, and to rid it of its documented and incessant abuse of power by politicians and public officials.

Indeed, our country has a reprehensible historical record of politicians and public officials- as evidenced, inter alia, by countless commissions of inquiry reports – breaching public trust and engaging in practices subversive of our national development efforts.

Those who take the opposite view opine that the majority decision serves unwaveringly the rule of law, and provides safeguards against reckless reputational damage to politicians and public officials. That in any case, it was the unsubstantiated allegations of the plaintiffs that furnished the basis for the Supreme Court’s majority decision.

I must admit that a careful examination of the majority and minority opinions demonstrates that these disparate reactions are not bereft of substance. Yet upon a careful examination of both the majority and minority opinions, it appears to me the majority decision is unsound, the reasoning unpersuasive, and the facts and inferences relied upon in the majority opinion cannot stand on the totality of the evidence appearing in both the majority and minority opinions.

Chances are that you have heard or read about the decision, and you, like many Ghanaians, have been wondering what the whole case was all about. Shorn of the complexity of the reliefs the plaintiffs were seeking before the Supreme Court, the case presented quite a simple issue for our apex court to decide.

In 2008 the Minister for Water Resources, Works and Housing in the Kufuor Administration, in what looked like a protocol allocation, requested or directed the Lands Commission, which has the constitutional duty to manage public lands, to grant Bungalow No. 02, a public property located at Ridge, Accra, to Jake, and the Lands Commission complied with that directive, did the Minister and the Lands Commission abuse their discretionary powers concerning the management of public lands?

The majority opinion of the Supreme Court delivered by Brobbey JSC, joined in by Sophia Adinyira, Rose Owusu, Paul Baffoe-Bonne, Julius Ansah, and Vida Akoto-Bamfo JJSC, with a concurring opinion by Jones Dotse JSC, answered this question in the negative.

In contrast, William Atuguba JSC joined in by Sophia Akuffo and Sophia Adinyira JJSC, had no doubt in their minds this conduct constituted an abuse of discretionary powers. In this article, I do not seek to dissect the majority and minority opinions. What I seek to do is to highlight aspects of the majority opinion I consider problematic by focusing, in particular, on one issue emanating from the Court’s judgment that as a practising lawyer and legal academic I think is a constant irritant to the relative rationality of law. That is, how scientific is the process that judges use to arrive at the “facts” to support their opinions? A scrutiny of many controversial decisions of our Supreme Court in recent times shows that judges’ treatment of the “facts” of a case has a disproportionate influence on the outcomes or the kind of justification they are able to provide for their conclusions.

Facts of the Jake Bungalow Case

The disputed property, Bungalow No.02, located at Mungo St., Ridge, Accra, was state/public property that for a long time had been used to provide accommodation for public officials. In 2008 the Lands Commission, acting on behalf of the President of Ghana in whom all public lands are vested in trust for the people of Ghana, leased this bungalow to Jake.

Before the grant of the lease to Jake, he had occupied the bungalow as his official residence during his time as the Chief of Staff in the Kufuor Government after the bungalow had been renovated at considerable cost to the state.  The Lands Commission had leased the bungalow to Jake “at the request of the Minister of Water Resources, Works and Housing”.

Specifically, Jake’s allocation letter dated 2nd June 2008 stated, inter alia, that: “The Lands Commission at the request of the Minister of Water Resources, Works and Housing has decided to offer you plot No. 02, St. Mungo St., Ridge Residential Area, edged pink on the attached plan and enclosing an area 1.06 acres at a price of three hundred and ninety thousand (GH) cedis (GH 390,000.00) for redevelopment… The plot shall be used for the development of a two storey duplex or detached houses… [for a] 50-year renewable lease on terms and conditions usually embodied in leases in government land for residential purposes…”

Reliefs sought by the Plaintiffs

Based on the undisputed facts above and other allegations, the plaintiffs started an action in the Supreme Court against the Attorney-General as 1st Defendant (Hon. Jake Okanta Obetsebi Lamptey later joined the suit as 2nd Defendant) seeking the following reliefs:

  1. A declaration that by virtue of Articles 20 (5), 23, 257, 258, 265, 284,and 296 of the Constitution of the Republic of Ghana,1992, the Minister of Water Resources, Works and Housing in the previous Government of His Excellency, President J.A Kufuor, did not have the power to direct the sale, disposal or transfer of any Government or public lands to the 2nd Defendant or any other person or body under any circumstances whatsoever, and that any such direction for disposal, sale or transfer to the 2nd Defendant was unconstitutional  and illegal;
  2. A declaration that by virtue of Articles 20 (5), 20 (6), 23, 257, 265, 284, and 296 of the Constitution of the Republic of Ghana, 1992, the Government of Ghana is obliged to retain and continue to use in the public interest the property compulsorily acquired for public purpose the parcel of land… on which is situated… Bungalow No. 02, located  at St. Mungo St., Ridge, Accra;
  3. A declaration that the purported sale of the said Government Bungalow to one of its high ranking public officials, the 2nd Defendant, was in utter contravention of Article 20 (5), 23, 257, 258, 265, 284, and 296 of the Constitution of the Republic of Ghana, and the purported direction of the Minister of Water Resources, Works and Housing in the previous Government of His Excellency, President J.A Kufuor, for the disposal, sale or outright transfer of  the said property in dispute to the 2nd Defendant smacks of cronyism, and same is arbitrary, capricious, discriminatory, and a gross abuse of the discretionary power vested in a public officer under the 1992 Constitution;
  4. A declaration that the publication by the Lands Commission and the Land Title Registration Office at page 18 of the “Ghanaian Times” published on 22/11/2008 in respect of Notice of Application for the Registration” by the 2nd Defendant of  the parcel of land designated as …Bungalow No.02, located at St Mungo St. Ridge, Accra, a step taken by the Chief Registrar of the Land Title Registration Office to grant to the 2nd Defendant a land certificate in relation to the said property so as to effectuate the said sale of the said Government property to him, was in utter  contravention of Article 20 (5), 23, 257, 258, 265, 284, and 296 of the Constitution of the Republic of  Ghana,1992, and thus unconstitutional and void and the same must be struck out as such;
  5. An order of perpetual injunction restraining the Lands Commission and the Chief Registrar of the Land Title Registration Office, their workers and agents from perfecting the registration of the parcel of land designated as… Bungalow No.02, located at St. Mungo St., Ridge, Accra, in the name of the 2nd Defendant.”

The reliefs sought by the plaintiffs appear extremely packed and complex. Many distinct remedies underpinned by different and independent constitutional provisions have been lumped together, and the legalese within which the reliefs have been couched make it necessary to unpack and simplify the real substance of the remedies the plaintiffs were seeking. Simply put, the plaintiffs were asking the Supreme Court to declare as unconstitutional and illegal the lease granted by the Lands Commission to Jake and other persons or bodies in similar circumstances, and to halt all ongoing processes at the Land Title Registration Office to perfect Jake’s tile in Bungalow No.02. The grounds for the reliefs were that:

  1. In requesting or directing the Lands Commission to grant the lease to Jake, the Minister  of Water Resources, Works and Housing contravened:

 

  1. Article 258 which empowered the Minister to give, subject to the approval of the President, only written general directions on matters of  policy in respect of the functions of the Lands Commission;
  2. Article 265  which stated, inter alia, that the Lands Commission shall not be subject to the direction or control of any person or authority in the performance of its functions;
  3. Article 23 which required administrative bodies and officials to  act fairly  and reasonably, and in compliance with the requirements of  the law;
  4. Article 284 which asked public officers to avoid conflict of interest or situations likely to lead to conflict of interest; and
  5.  Article 296, in the sense that, the ministerial request or directive to the Lands Commission was arbitrary, discriminatory and capricious, smacked of cronyism, and did not follow due process.

 

  1. According to the plaintiffs, the Lands Commission was also at fault because in granting the lease to Jake at the request of the Minister, it violated:

 

  1.  Article 20 (5) as the lease which was for the purpose of building “ a  duplex or a two-story building”  did not serve the “public interest”  nor met the requirements of a “public purpose” as demanded  by Article 20 (5) for use of public lands;
  2. Article 23 as it failed to act fairly and reasonably, and in compliance with the requirements of law;
  3. Article 296 as it acted in a capricious or arbitrary manner without following the due process of law.

 

  1. Owing to these alleged constitutional infractions, it was the case of the plaintiffs that the lease granted to Jake was unlawful and should be declared as such by the Supreme Court, and all ongoing processes at the Lands Commission/Land Title Registration Office to perfect Jake’s title must be halted.

The Majority Opinion and the Facts Relied On

The Supreme Court by a majority decision of 6-3 held that:

 

  1. The allegations relating to conflict of interest, and the reliefs founded thereon were incompetent because the Commission for Human Rights and Administrative Justice (CHRAJ) was the proper forum to ventilate concerns about conflict of interest involving public officials.

 

  1. The plaintiffs did not provide any proof to substantiate their allegations of discrimination, cronyism, arbitrariness, caprice, unreasonableness, and abuse of power against the Minister of Water Resources, Works and Housing and the Lands Commission. “In proof of their averments all that happened was that the plaintiffs based their complaints on bare allegations. No evidence was led whatsoever to substantiate those allegations”.

 

  1. The allocation of Bungalow No. 02 to Jake “served the public purpose or interest” because “the three flats to be constructed [by Jake on the land] will be obviously available to members of the public who can afford the cost of renting or buying them”.  Stated differently, once there is a possibility of Jake renting the house  to those who can afford it, the grant of Government land to Jake to put up flats for sale or rent served the public interest or purpose.

 

  1. In the absence of evidence to the contrary, the court would presume that the lease was properly granted to Jake by the Government of Ghana. In the words of the majority, “On the face of the documents before the court, the lease was granted by the appropriate authority”. Finally, there was no evidence to show that the Minster or the Lands Commission abused their discretionary powers concerning the management of stool lands.

 

In holding thus Brobbey JSC, who delivered the majority opinion, did not mention or advert his mind to text of the allocation letter to Jake, which expressly stated that the allocation of Bungalow No. 2 to Jake was done “at the request” of the Minister. Owing to this omission the majority opinion did not address the question whether the said request or directive contravened, inter alia, Articles 258 (2) and 265 relating to the relative operational autonomy of the Lands Commission as regards the management of stool lands.

What is more, Brobbey JSC determined that an extract of minutes from a Cabinet meeting that suggested that the lease to Jake conflicted with Government policy regarding a redevelopment scheme for some public lands, was inadmissible and had no truth value as it suffered from many evidentiary defects. First, it did not come from proper custody and authority. Second, it was not certified, and third, it had no specific connection to Bungalow No. 02. Based on these reasons, the majority dismissed all the reliefs being sought by the plaintiffs.

 

Minority Opinion and Facts Relied On

The minority opinion, per the judgment of Atuguba JSC, held that:

  1. The allegation of conflict of interest should be dismissed for CHRAJ is the proper authority to deal with conflicts of interest involving public officials;
  2. The plaintiff’s allegations regarding discrimination and corruption were unsubstantiated.
  3. The Lands Commission contravened Articles 23, 20 (5) and 296 because the grant and privatization of the Bungalow No 02 to Jake for the purpose of building flats did not meet the requirements of “public interest” or “public purpose” under Article 20 (5). Public interest or public purpose implied a purpose that benefited the larger community.
  4.  The Ministerial directive to the Lands Commission to grant a lease to Jake, and the Commission complying with that  directive, constituted an abuse of discretionary powers granted both the Minister and the Lands Commission under the Constitution.
  5. The allocation of the Bungalow No. 02 to Jake at the request of the Minister of Water Resources, Works and Housing, was unreasonable, procedurally improper, and illegal, and in contravention of, among other things, Articles 23, 258 and 296.
  6. For the above reasons, the minority, per the judgment of Atuguba JSC, granted all the reliefs sought by the plaintiffs except the reliefs founded on allegations of conflict of interest, discrimination and corruption.

Are judges at liberty to choose or emphasize different facts?

In arriving at their decisions, the majority and minority opinions did not rely on the same sets of facts. One major part in Atuguba JSC’s narration of the relevant facts was that the Lands Commission offered the Bungalow No.02 to Jake “at the request of the Ministry of Water Resources, Works and Housing”. In contrast, as stated earlier, the majority did not consider this piece of evidence. The critical question to ask is whether or not judges are at liberty to emphasise different  facts of a case?

An idealized application of law looks like this: when a court is confronted with a case, it makes findings of fact through the evidence presented to it and considered through the application of certain legal doctrines and principles. Once the “facts of the case” are established, the court applies the law to the facts to arrive at a conclusion. However, the process of establishing facts can be quite complicated and sometimes extremely subjective, especially where there are conflicts in the evidence. Where there is such conflict in the evidence, the ideal posture is for the court to consider the conflict, weigh and rank the evidence in order to arrive at facts that fairly represent the entire evidence on record.

Over a century ago, a school of legal thought called the Realist School focused attention on the slippery character and complexities of “so-called facts of the case”. In some cases, the realists called for enlightened skepticism or rational doubt about the “facts” used to support judicial decisions. Sadly, even today the process of gathering the “facts” of a case, far from being scientific with a measure of predictability, can be quite problematic. It is therefore not surprising that there have been many cases decided by our courts, where the outcome depended primarily on what judges considered to be the “facts” of the case.  The Supreme Court decision in the Jake Bungalow palaver is an example of a case where one “fact” or a couple of “facts” or admissions considered by some judges but glossed over or considered insignificant by other judges, can tip a case in one direction or the other.

Unanswered Questions

Can the majority sustain the contours of its reasoning if Brobbey JSC had considered the legal effect of this piece of incontrovertible evidence: that the allocation of Bungalow No. 02 to Jake was “at the request of the Minister of Water Resources, Works and Housing”?  Was this request consistent with, or an abuse of the Minister’s power under Article 258 and 265, to give general directions only on matters of policy to the Lands Commission? Did the Lands Commission in exercising its power under Article 258 to manage public lands abuse its discretionary power by offering Bungalow No 02 to Jake “at the request of the Minister of Water Resources Works and Housing” .

The questions assume further salience when we consider the fact that the 2nd Defendant (Jake) did not deny that Bungalow No.02 was granted to him at the request or upon the directive of the Minister. According to the 2nd Defendant:“Paragraph 5: The allocation and grant in issue, as well as other parcels within the redevelopment scheme, we contend, were made within the mandate and discretion of the Executive or Government in the management of public lands pursuant to Article 258(1) of the Constitution, particularly within the mandate of the Minister who was in charge of housing policy and management of government housing stock; and of section 2(1) of the Lands Commission Act, 1994, Act 483…”

As is evident in the above submission, it was the case of Jake that the grant and allocation of the bungalow fell within “the mandate of the Minister who was in charge of housing policy and management of government housing stock”. Quite evidently, there was indisputable evidence that the grant to Jake was founded on a specific request from the Minister of Water Resource, Works and Housing. Arguably, this ministerial request clearly impinged upon the relative autonomous status of the Lands Commission as stipulated under Articles 258(2) and 265.

Presumptive findings, Unsubstantiated Claims, Wrong inferences in the majority decision

Both the majority and minority opinions dismissed the plaintiffs’ allegations of corruption, cronyism, and discrimination leveled against the Minister and officers of the Lands Commission. The insistence on positive evidence to support claims, however, does not appear to have been consistently applied in the majority decision.

In his judgment, Brobbey JSC noted that “the use to which the Lands Commission directed the 2nd Defendant to put the land will serve the public interest or will be for public purpose. This is because the three blocks of flats to be constructed will obviously be available to members of the public who can afford the cost involved in renting or buying them”.  In order words, without any explicit evidence before Brobbey JSC as to whether Jake would rent or sell the three blocks of flats or the Lands Commission required Jake to rent or sell any flats he put up on the land to members of the public who can afford the cost of renting or buying them, His Lordship made a presumptive finding that Jake would sell or rent the flats he put up on the land, and therefore the use of the property “will serve the public interest”.

In my respectful view, the presumptive finding that Jake’s use of the property will serve the “public interest” because the “three blocks of flats to be constructed will obviously be available to members of the public who can afford the cost involved in renting or buying them” is too speculative. For all we know, the flats will be occupied by members of his family on a rent-free basis. If this view is correct, the implication of the majority opinion is that if a person acquires Government land to build flats to house members of his family, this use of Government land will serve the “public interest”, and not necessarily a private interest.

Quite apart from the above, the majority opinion draws erroneous inferences from the facts before the Court. For instance, Brobbey JSC noted that: “The issue in this case is this: The plaintiffs contended that the property should be retained for the purpose for which it was originally acquired. That would mean that it would be used by one Minister or one public officer. The grant to the 2nd Defendant was to develop the property into three blocks of flats of at least four storeys. Which of the two houses will benefit the public more or satisfy the public purpose as required by the constitutional provisions?”

The inference being drawn by Brobbey JSC that the property would be used by “one Minister or one public officer,” was clearly a non-sequitur. As Atuguba JSC pointed out in his dissenting judgment: “The bungalow has been used for many years for public official accommodation. The location of the house and the plot on which it stands are obviously strategic for easy access to the Ministries, the hub of governmental activity. Judicial notice is taken of the scarcity of bungalows for high ranking officials including judges. If the plot of land could be used “for the redevelopment of three blocks of flats  of at least  four storeys… which the 2nd defendant undertook to build under the terms of the grant of the plot to him why could it not hold more bungalows for public official accommodation?…”.

Here Atuguba JSC amply demonstrates that if the argument is about utility, the efficient use of state lands, and cost savings to the state in housing public officials, the facts, circumstances and justice of the case cautioned against the grant of the bungalow to Jake. Juxtaposed against these observations by Atuguba JSC, Brobbey JSC’s analysis about the utility of the grant to Jake and his conclusion that Jake’s use of the property will “obviously” serve the public interest appears exceedingly unconvincing.

Other Inconsistencies in the majority opinion

Article 20(5) and (6) of the Constitution states that property compulsorily acquired by the state shall be used only in the public interest or for the purpose for which it was acquired, and where the property is not used in the public interest or according to the purpose of acquisition, the previous owners of the land shall have the first option to buy the property from the state. In his majority opinion, Brobbey JSC stated that the position of the law as held in the case of  Kpobi Tsuru II v Attorney-General (on review) [2011] SCGLR 1042 was that Articles 20(5) and (6) do not apply to property compulsorily acquired by the state before the coming into force of the Constitution.

Specifically, Brobbey JSC opined that “…the first point that may be made on these provisions is that this Court has by a majority decision of four to three decided that Article 20(5) and (6) do not apply to lands compulsorily acquired before the coming into force of the 1992 Constitution. That was the decision in Kpobi Tsuru II v Attorney-General (supra)…. That is the state of the law as at now until it is set aside by another decision of this court or by statute. If that is the correct state of the law it follows that the plaintiff’s reliefs do no hold water so long as they are founded on Article 20(5) and (6)”.

If Article 20(5) and (6) does not apply to the land in dispute as it was acquired by the state before the coming into force of the Constitution then it was unnecessary for the majority opinion to seek to demonstrate (infra) that the lease to Jake would serve a public interest/purpose within the meaning of Article 20(5) of the Constitution.

Public Interest/Purpose as an Unruly Horse

Perhaps the most knotty aspect of the majority decision is the holding, stated above, that the grant of the bungalow to Jake serves a public interest/purpose as required by Article 20(5) for the simple reason that “the three blocks of flats to be constructed will obviously be available to members of the public who can afford the cost involved in renting or buying them”.  This is a revolutionary extension of the meaning of public interest/purpose as explained in recent Supreme Court decisions. In the case of Kpobi Tsuru II v Attorney General, Dotse JSC,  who delivered the majority judgment shed light on the concept of public interest/purpose as follows: “…once the use to which the land is to be used is not restricted to any individual  or personal  interest, but one to which the general public will have a benefit or the benefit of the project will inure to the entire country either directly or indirectly/ the public interest/purpose would be deemed to have been adequately catered for”.

A legitimate question to ask is whether the grant to Jake of public land, located in an upper-class residential neighborhood such as Ridge, Accra, to build flats thereon confers a personal benefit or it benefits directly or indirectly the general public. The reasoning that there is a public interest/purpose in the grant for  the simple reason that Jake may rent out or sell the flats he puts on the land to members of the public who can afford property at Ridge, Accra,  appears too attenuated as to be extremely unconvincing.

That is, fully stretched, all private interests partake of a public purpose/interest. Does a real estate company which puts up estate houses for sale to members of the public based on the ability to pay, serve the public interest/purpose? Similarly, does a private person who sets up a private company serve a public interest/purpose because the company is likely to provide employment to some Ghanaians? The majority’s expansive definition and application of public interest/purpose needlessly collapses the distinction between what counts as private and public interests without any fully articulated policy reasons why such collapse is necessary.

Again, as pointed out by Atuguba JSC, conceivably, every private interest can be extended to include a public interest/purpose, and therefore it is necessary to note gradations or degrees of public interest. And that “certainly a public trustee [of public land] with fiduciary accountability under articles 257(1), 258 and as clearly expounded in Article 36(8) [which talks about land carrying a social obligation, and placing a duty on managers of public land to “serve the larger community”] cannot be said to have taken such a decision [that is, granting public land to Jake to put flats possibly to rent or sell to those who can afford them] in the best manner. I am compelled by the force of the facts and common sense… to reach this conclusion [that is, the lease to Jake does not serve the larger community”]. Here again, Atuguba JSC’s reasoning appears more persuasive as to what is meant by public interest/purpose within the meaning of Article 20(5) and (6) of the Constitution.

What does the majority decision mean?

In my considered opinion, the majority opinion of the Supreme Court does not mean that the grant of Bungalow No.02 to Jake is a legal fait accompli that can never be challenged. Rather, the decision implies that unless there is positive, admissible and cogent evidence of illegality, procedural impropriety, unreasonableness, discrimination, conflict of interest, etc or some other legitimate legal justification against the grant of Bungalow No. 02 to Jake, and this provides a legal basis for setting aside or vitiating the lease transaction, the lease granted to Jake is regular and lawful, and so it shall remain.

In other words, nothing prevents the Executive for good and lawful cause, amply communicated to Jake, from seeking to reverse the lease of Bungalow No. 02 granted to Jake and other public officials.  The majority opinion makes this point abundantly clear when Brobbey JSC stated that: “We are not condoning cronyism, corruption, arbitrariness, capriciousness or discrimination….The judgment merely states the position that the plaintiffs have applied to the court to make specific declarations against public officers. They base their claim for declarations on specific acts. They were not able to prove those facts. Their applications remain baseless and without justification. Therefore their applications for those reliefs have failed. That is all.”

In other words, if anyone can substantiate allegations of illegality, wrong-doing, etc regarding the grant of the lease to Jake or other lessees of Government lands, it might be possible to set aside or vitiate those grants of public lands.

Conclusion

In dismissing the reliefs founded on corruption, discrimination and conflict of interest, the Supreme Court provided reasons and justifications I consider unassailable. Yet I find unpersuasive the reasons the majority gave for holding that the Minister for Water Resources, Works and Housing and the Lands Commission did not abuse their powers relating to the management of public lands.

Unlike the minority opinion, the majority opinion never considered the incontrovertible evidence that the Lands Commission leased Bungalow No. 2 to Jake “at the request” of the Minister nor assessed the legal effect of this directive on the relative autonomy and independent status of the Lands Commission as guaranteed under the Article 258(1) and 265 of the 1992 Constitution.

But this case raises a bigger policy issue. Article 296 of the Constitution states, inter alia,  that where a person or body is given discretionary powers under the Constitution, and the person or body is not a court or judge, the exercise of the discretionary power should be governed by regulations published in a constitutional or statutory instrument.  This is to ensure transparency, accountability and to set out a clear framework within which non-judicial exercise of discretionary power can be legally assessed and challenged.

Unfortunately, almost 20 years after the coming into force of the Constitution, there are no such published or gazetted guidelines to regulate the Lands Commission’s exercise of discretion in the management of public lands. Parliament must step in to set out a transparent regulatory framework to govern the Lands Commission’s constitutional function of managing, and for that matter, leasing public lands.

[The Author, Abdul Baasit Aziz Bamba holds a PhD in Law from Harvard Law School, USA, and is a Lecturer at the Faculty of Law, University of Ghana, Legon E-mail:  [email protected] ]

T&T Tour Was an Eye-Opener: Sekondi-Takoradi Chamber of Commerce

By Latifah Funke Ibrahim       [The Business Analyst]

The Sekondi-Takoradi Regional Chamber of Commerce and Industry (STRCCI), has described as very enlightening a recent working trip by some of its executive members to Trinidad and Tobago (T&T), saying the team learnt a lot from the visit that would be of immense benefit to them, their members and the nation as a whole.

The delegation made of three executive members, comprising Mr. Ato Van-Ess, Mr. Vincent Annan, and Mr. Cadmond Dadzie, the Western Regional Chairman, Executive Secretary and Treasurer respectively, returned from the 10-day working tour on Sunday May 20, 2012.

Speaking to The Business Analyst in an interview last Monday, May 28, 2012, Mr. Van-Ess said the Trinidad and Tobago Chamber of Commerce has been changed to the Energy Chamber because the country realized that their economy largely rides on their energy sector to grow, thereby creating the need for a separate institution that would focus more attention and investment into the sector to reflect all the sectors of the economy.

He said the T&T has been involved in petroleum for over 100 years and thus possessed a wide worth of experience in matters relating to the oil and gas industry, making their Energy Chamber, being the voice of business for the country as well, rich with experience in the area, and a worthy source of education.

“… We had a lot to learn from them during the trip and had the opportunity to learn how we can implement local content here by looking at local content in totality per the Trinidad & Tobago experience,” he said.

With respect to Local Content and Participation, Mr. Van-Ess said that the Ghanaian team discovered that the T&T oil and gas sector was dominated by local companies, who played major roles in the development of the sector as opposed to international oil companies (IOCs) major involvement in the sector here in Ghana.

He noted that despite the strides made by that country in their energy sector, they still yearned for more and were still coming out with new policies and initiatives to derive more from the energy sector and consequently grow their economy.

He explained that that country had recently established a Local Content Chamber, all in a bid to ensure that there was high level of local participation so that small companies can also actively participate in the sector so it can be of benefit to them as individuals and the society at large.

Mr. Van-Ess added that they found that for local companies to actively participate in the oil and gas industry there was the need for them to strictly adhere to all the safety measures related to the industry, as is being done in Trinidad and Tobago through the STOL System which basically ensures that all local companies adhered to all health and safety requirements.

“All local companies are required to be STOL compliant as per the Energy Chamber standards,” he said adding that the way the system was run ensured that the multinational oil companies also buy into the system since they insisted on STOL approved invoices and certificates.

On the government front, he said the T&T government was doing a lot to contribute through investment into vocational and technical training of its youth in the sector to capacitate them to actively partake in the sector.

He mentioned the Trinidad and Tobago University of Technology and the National Skills Centre, among others, which are all geared towards developing their workforce to get involved in the industry to help better their lives and develop the country.

He said the educational sector have realized that the products are not able to fit into the industry well due to the theoretical nature of their school content so they have developed courses that are fashioned for the job market and would better prepare the graduates to effectively take up roles in the sector and perform them effectively.

They have further invested in laboratories and other educational facilities and infrastructure to provide practical training to the students and trainees, “there is a lot of commitment to educating labour for the industry in that country,” he said.

Mr. Van-Ess has therefore advised and called for comprehensive education of Ghanaians about the industry to better understand what it entails to better utilize it, citing some Nigerian delegation that had also visited the T&T to acquire more knowledge from the Caribbean, despite their over 50 years in the industry.

He noted that the T&T government has institutions that were built only a few years back, but with commitment and hardwork, were now running smoothly and training students from other countries such as Nigeria and thus believed it can be done here as well.

He however, mentioned that they noted that all individuals appointed to occupy positions in those public institutions had enormous worth of experience in the industry, which made them understand the system better work effectively; an area he felt Ghana stands disadvantaged.

Responding to whether he would recommend any changes and ideas to the policy makers on the implementation of LCP here as per their T&T experience, Mr. Van-Ess reiterated the need for the policy to be passed into law, and the will of the appropriate institutions as well as all stakeholders to implement the law to attain set targets.

He added that even in its current policy state, if government and the policy makers understood what they are doing, and prioritised their targets rightly with respect to local content and participation, “Ghana could go miles in the industry.”

“We do not need a law to start supporting and setting up institutions to build capacities of the Ghanaian workforce for the oil and gas industry,” he emphasized, stating that what the country need instead is for government, especially, and all stakeholders in the sector to show commitment to the objectives, and understand the industry well so they can set realistic and attainable targets for the country.

On the issue of T&T national electricity grid running on gas, as disclosed by the Honorary Consul for T&T Mr. Hilton John Mitchell in his pre-departure briefing of the team, and how feasible it could be replicated in Ghana, Mr. Van-Ess confirmed that the T&T government had established the gas infrastructure to meet the total energy demand of the country, and expressed confidence that it could be replicated here but with a few challenges, including the infrastructure and the willingness of consumers to patronize it.

Mr. Van-Ess further spoke on avoiding the Dutch Disease since the T&T economy rides mainly on their petroleum sector, saying that the existence of other industries like agriculture and manufacturing was a plus for Ghana, since those industries were already established and working but rather called for a substantial percentage of the petroleum proceeds to be channeled into those sectors to avoid the so called Dutch Disease.

He stated further that in cases where government pays more attention to the petroleum industry at the expense of other industries, private bodies such as the Ghana National Chamber of Commerce and Industry (GNCCI) would be there to remind them of the other industries.

He mentioned also instances where the activities in the petroleum industry might affect the fishing industry and said that when that happened, they would impress upon the relevant stakeholders to help rectify them.

“The fishing and farming sectors for instance have done so much for players in the area and their communities such that I don’t see it collapsing because of a new industry”, he said adding that they were too well-established to be impacted that way by the oil and gas industry.

He said the chamber would hold sessions and conferences to share their experiences with their members, interact with the media about the trip, and also send some of their members to go and study what is being done there in the near future.

The chamber is also encouraging foreign investors in other sectors to visit the Western Region.

The trip was facilitated by the Trinidad and Tobago Consulate in Accra, with sponsorship from the Business Advocacy Challenge Fund (BUSAC).

Power Demand Grows Over 10% P.A.

-Says Ministry of Energy

…As Supply Staggers

…And VALCO Trots for More Power

By J. Ato Kobbie, Managing Editor [The Business Analyst]

electricityThe annual growth rate for electricity demand in the country has exceeded 10% in the last three years, posing a major challenge to the implementation of distribution due to shortfall in capacity.

The revelation, which was contained in a rejoinder by the Ministry of Energy, to a publication accusing the Volta River Authority (VRA) Board of sabotaging the Volta Aluminium Company Limited (VALCO), with inadequate power supply, said:

“Between the first quarter of 2012, and the same period last year, for instance, the system’s peak demand has grown by 100 MW (from 1609 MW to 1710 MW).”

According to the Ministry, supply capacity, however, has not kept pace with this growth in demand, thereby putting the power system under great stress in 2012, with the system and its operating reserve margins now lower than professionally acceptable.

“For instance, the system reserve margin for the month of April 2012 was about 3%, which is far below the required margin of 20%,” the Ministry revealed, adding that

“Given the current margin, any slight drop in the available supply or increase in the forecast demand will result in a frequency decay, which can lead to a total system shutdown.”

It said additionally, given the current tightness of the system, VRA is compelled to run its higher-cost diesel plants to meet peak demand, for which extra cost they receive no tariff compensation from the PURC, thus compromising their financial position.

The ministry explained that the system has been forced to shed load from time to time to ensure demand/supply balance, when any units in the system become unavailable due to the erratic gas supply from Nigeria or “for any other technical reasons.”

“Under these circumstances, it would not be prudent for VRA to supply VALCO any additional power at this time, as it would further weaken the system, render it more vulnerable to outages, and threaten general system stability,” the Ministry cautioned.

It said desirous of ensuring that VALCO operates optimally to contribute to employment generation among other benefits, it had been holding frequent meetings with all the parties to assess the situation and explore the possibility of ensuring that VALCO runs the second pot line.

“In fact, the possibility of giving VALCO power to run an extra half pot line at off-peak periods has been discussed by a technical committee, including GRIDCo, VRA and VALCO, set up by Minister for Energy, Dr Joe Oteng-Adjei,” the statement said.

According to the Ministry, “GRIDCo, as the system operator, in its Report dated January 2012, titled, TECHNICAL ASSESSMENT OF THE VIABILITY OF RUNNING VALCO ON ADDITIONAL POT LINES IN THE YEAR 2012, indicated that more electric power capacity has to become available before VALCO’s request for additional power during off-peak could be safely met.”

It said even though the report in question pointed to August 2012 as the ideal target date for additional power to VALCO, with May 2012 as the earliest date for such a consideration to be made, Nigerian gas volumes have since “fallen 33% from 2011’s levels and the supplies have also become increasingly erratic and unreliable.”

According to the Ministry of Energy, the situation has further reduced system availability, not only by reducing VRA’s ability to operate its machines with comfort, switching its fuel use back and forth, depending on the availability of gas, but also by reducing electricity output from Sunon Asogli’s 200MW plant when gas volumes have fallen to very low levels.

It said under the circumstances, “the recommended schedules in GRIDCo’s report will have to be pushed back further if these recent events are to be factored in,” adding that all parties involved clearly understand that the best option to provide sustainable power to VALCO will be to speed up expansion in generation.

GENERATION EXPANSION PROGRAMME

The Ministry of Energy explains further that with the steam turbine of Takoradi 1 (110 MW) and the new Takoradi III (132 MW) projected to come online in the second half of 2012, VRA will place an additional generation capacity of 240 MW on to the system.

It stressed however, that even though these additions, together with 400MW from Bui in 2013, will go a long way to improve the stability of the system, to make it safe for VALCO to increase its power offtake, “given the rapid growth of electricity demand in the country, the generation capacity additions mentioned above will not be sufficient to ensure system complete stability unless there is a sustained programme to add to the country’s electricity capacity,” which is precisely what the Government is committed to doing.

The rejoinder, titled ‘Ministry of Energy States Position on Supply of Power to Operate a Second Pot-Line,” were in reference to two stories on the front pages of the Monday, April 30, and Tuesday May 15 2012, issues of The Enquirer, captioned, VRA Fingered for Sabotaging VALCO, and Concerns Grow over VRA Inaction respectively.

CABINET DECISION AND VRA COMMITMENT

The statement said the decision to re-start VALCO was made by Cabinet, with the specific details left to be sorted out by VRA/GRIDCo/VRA, under the coordination of the Ministry of Energy and the Ministry of Finance and Economic Planning.

Signed by Alhaji Inusah Fuseini, Member of Parliament (MP) for Tamale Central and Deputy Minister of Energy (Power), the statement continued that a series of meetings “led to agreement by all parties, including VALCO, on the amount of power to be supplied to VALCO and the rate to be charged for it.”

It said under the agreed arrangement, VALCO’s request  to have sufficient electricity to run two pot-lines was to be graduated, starting first with VRA guaranteeing to provide sufficient power to run one pot-line, and then for two pot-lines when additional generation capacity comes on stream.

“This,” according to the statement, “was expected to happen on the return of the Takoradi steam turbine and the completion of the Takoradi III project” and “VRA has since January 2011 complied fully with the agreement by supplying VALCO 70MW of electricity, sufficient to run one pot-line.”

The Ministry of Energy said it was committed to “working together with VRA to fulfil its mandate of generating adequate and reliable power for industrial, commercial and domestic use in Ghana.”

It therefore took strong exception to the attempt to personalize the issue in the said publication by singling out VRA’s Board Chairman for blame, emphasising that “failure to supply VALCO power to run beyond one pot-line under the present conditions is NOT a case of ‘VRA Chairman and Board being adamant’, nor sabotage by VRA Management and staff, but one of prudent and responsible management of our vital but delicate national energy system.”

It assured the public that VRA, GRIDCo and VALCO are sister agencies under the same Ministry and are complimenting each other’s efforts at meeting the power needs of the country’s rapidly growing economy for the benefit of all stakeholders. [[email protected]]

‘Osagyefo Barge’, Balkan Energy Fraudulent Claims & A Ppa That Never Was

By J. Ato Kobbie, Managing Editor [The Business Analyst]

When FPSO Kwame Nkrumah M.V. 21 was being designed and constructed, the Jubilee Field partners, together with the Government of Ghana, were hopeful that first oil would be accompanied by first gas.

FPSO Kwame Nkrumah was to process the first 30-million standard cubic feet of gas from the field into dry gas, to power the ‘Osagyefo Barge,’ to supplement the country’s electricity requirement.

Alas! That was not to be because the ‘Osagyefo Barge’, a brainchild of Tsatsu Tsikata, former Chief Executive Officer of the Ghana National Petroleum Corporation (GNPC), had been grounded, incapable of generating a kilowatt of power, notwithstanding a July 2007 deal with Balkan Energy Ghana Limited, to operationalise it within 90 days.

It all started with a memorandum of understanding between the government of Ghana and Balkan Energy in May 2007, following the latter’s representation to the country that it had the capacity to operationalise and commission the ‘Osagyefo Barge’ within 90 days to supply the country with 125 megawatts of electricity.

It would be recalled that on July 27, 2007 Joseph Kofi Adda, then Minister of Energy signed on behalf of Ghana the said PPA, with Mr. Phillip Elders, 3rd defendant in the case, acting on Behalf of Balkan Energy (Ghana) Limited (2nd Defendant) for the lease of the 125-megawatt dual fired power barge, Osagyefo Barge, then situated at Effasu-Mangyea in the Western Region of Ghana.

The agreement involved the repair, rehabilitation and commissioning of the Osagyefo Barge by Balkan Energy Ghana Limited, within 90 days of the Effective date of the Power Purchase Agreement.

It was this deal with Balkan Energy that culminated in a Power Purchase Agreement (PPA) which the Supreme Court of Ghana last Thursday, May 17, 2012 declared by a unanimous decision did not measure up to the requirements of the country’s laws because it constituted an international transaction and as such should have been validated by a parliamentary approval.

The PPA That Never Was

In declaring the PPA an international business transaction, the Supreme Court said among others that:

“The PPA between the Government and the first defendant was the result of negotiations between a foreign investor (3rd Defendant acting on behalf of owner of the second defendant) and the government,” adding that “This is a significant foreign element in the transaction.”

Continuing, the apex court said “Secondly, the first defendant, though a Ghanaian company, is wholly owned by a foreign entity, incorporated in the United Kingdom.  Thirdly, the managing director of the first defendant is a foreigner, the third defendant and control of the management of the first defendant is in foreign hands.”

 Back to Commercial Court

The Supreme Court further directed that “The case is accordingly remitted to the High Court for this court’s interpretation of article 181 (5) of the 1992 Constitution to be applied in the proceedings before it,” in apparent reference to the case between Government and Balkan Energy at the Commercial Court.

“We would like to end this opinion by repeating our request to parliament to enact a Bill indicating what modifications it wishes to make to article 181(5) of the Constitution,” the Supreme Court advised, adding that “This step would bring greater certainty and clarity to the law”

The Government had obtained an injunction at the Commercial Court, staying the order of the arbitration court, to allow the Supreme Court to determine the constitutionality and enforceability of the PPA.

Government had sought the injunction after Balkan Energy Ghana Limited, without notice to it, obtained from the District Court of Amsterdam a prejudgment attachment of the Government’s Bank account in the Netherlands to the limit of US$66,330, 000.

Balkan Energy cited to the District Court the pendency of an arbitration it had initiated as the legal proceeding for which an attachment was sought and relied on the provisions of clause 24 of the Power Purchase Agreement.

“It further justified the attachment on the enforceability of the power purchase Agreement and the Arbitration Agreement with reference to both Dutch Law and Article 18 of the United Nations Convention on Jurisdictional Immunities of States and their Property Attached hereto and marked “VG5” is a true copy of the Application for Attachment,” an affidavit by Vivienne Gadzekpo, Legal Counsel of the Ministry of Energy, in support of the application for the injunction on the orders of the international arbitration by the Attorney General at the Commercial court in July 2010 averred.

Continuing, Ms Gadzekpo revealed that “Although the attachment order was obtained on February 24, 2010, it was received by the Ministry only on May 31, 2010 after various banks had been served with the District Court order.”

Balkan started the arbitration procedures against the Government of Ghana in the Amsterdam court, which awarded attachment orders against the accounts of Ghana to the tune of more that $66 million in February 2010, an amount it claimed as damages and tolling charges since November 2008.

Red Flags Over PPA

The Government of Ghana, raised red flags over the constitutionality of the PPA, arguing strongly that both the power purchase agreement and the Arbitration Agreement contained therein were international Business or Economic transaction within the meaning of Article 181 (5) of the 1992 Constitution and therefore required Parliamentary approval to make it valid.

The Attorney-General, in 2010 therefore applied for a declaration rendering the PPA unenforceable because it infringed upon Article 181 (5).

It sought also a declaration that clause 22.2 of the PPA constituted an international business transaction to which the Government of Ghana was party and is unenforceable as infringing Article 181(5) of the Constitution and an injunction restraining all the defendants whether by themselves, their agents, their affiliates, subsidiaries or howsoever otherwise from instituting and/or pursuing arbitration proceedings or any other proceedings outside the jurisdiction of Ghana whatsoever against the Government in respect of or on the basis of the PPA.

While Article 181(1-4) deals with parliamentary ratification of loan agreements, article 181(5) extends the requirement to “international business transactions’ to which the government is a party.  It states that “This article shall, with the necessary modifications by Parliament, apply to an international business or economic transaction to which the Government is a party as it applies to a loan”.

But the defendants argued that the PPA is a valid contract between the Plaintiff and a Ghanaian company. Balkan had argued that it was not an international business or economic transaction to which the government is a party and therefore did not require parliamentary approval.

This was countered by the government of Ghana, citing many factors which rendered the transaction an international business.

The government had argued further that the expression of interest in the commissioning of the Barge and the negotiations for the PPA were conducted entirely by Balkan Energy LLC, which entered into a memorandum of understanding for the project and undertook to execute the project.

Fraudulent Claims

While Balkan Energy was struggling to get the ‘Osagyefo Barge’ to cough, a Reuters report captured its bosses fraudulently misrepresenting to the people of Botswana in May, 2008 that it had refurbished the barge and it was generating 125MW of power to Ghanaians!

[“We recently refurbished a barge-mounted power station in the nation of Ghana, which is successfully delivering 125 megawatts of power to the people of that nation,” said Phil Elders, President of Balkan Energy Company.

“The Osagyefo Power Barge, located in Effasu on the Ghanaian coast, is the first phase of a three-year project designed to deliver nearly 600 megawatts of electricity to that country. At project’s completion, approximately 1.9 million homes will be provided much needed energy relief.]

The power barge has however, still not become operational, a situation that Balkan Energy, in an action it embarked upon in the United States of America (USA) District Court for the Northern District of Texas, Dallas Division, blamed another US based company, Pro Energy Services International Inc for.

“To date, the Barge has not been rendered operational. Consequently, the Government has not been provided with any additional power therefrom to date and has thereby suffered loss and damage,” Ms Gadzekpo averred.

Balkan had accused Pro Energy of having caused damage to the Osagyefo Power Barge, which rendered it non-operational, thereby preventing it from meeting its contractual obligations to the GoG.

Pro Energy had met Balkan’s representatives in Accra, and after inspecting the barge, the former indicated its capacity and ability to undertake the servicing of the Osagyefo Barge.

Balkan Energy Company had contracted Pro Energy Services International in October 2007, to oversee the process of start-up and the commissioning of the barge that had been inactive at the time of the agreement.

In Balkan’s statement of claim in the United States Court, it states also that

Pro Energy committed to completing the work in 45 days instead of the 90 days and based on that a service contract was signed in September 20, 2007.

Records from the US Court, accessed by Government of Ghana from Pro Energy on a court order reveal that Balkan had raised concerns right from the beginning, about the caliber of personnel recruited by its subcontractor to execute the job.

Balkan Energy had, in that case, accused Pro Energy of being the reason for its inability to operationalise the Osagyefo Barge in order to meet its contractual terms with Ghana.

Balkan Energy further states that Pro Energy breached the service contract in several ways, which included pumping dirty water into the supply fuel for the turbine on the barge, wrongly wiring the voltage switch gear, and engaging workers who had no experience.

Balkan was therefore claiming from Pro Energy, cost of $1.2 million incurred in time wasted and for correcting the damage to the supply fuel, $80,000 for re-doing the wiring and travel fees for shipping workers who had no experience to and from the barge running into $75,000. Author: [email protected]

[A print version of this article is published in The Business Analyst of Wednesday, May 23rd  – Tuesday, May 30, 2012] 

GNPC SHOPS FOR JV PARTNER … To Operate New Oil Block

By J. Ato Kobbie, Managing Editor [The Business Analyst]

The Ghana National Petroleum Corporation (GNPC), true to its stated strategy of optimum participation in Ghana’s oil exploration and production, through playing a lead role, is in search of a partner to operate the South Deepwater Tano Block (SDWT) offshore Ghana.

Documents sighted by The Business Analyst indicate that the national oil company has already engaged the services of Zebra Data Services, U.K., a company which operates a virtual (online) data room, the EZ Data room, where it markets data worldwide.

A flyer sighted by this paper describe the block as ‘Located in the prolific offshore Tano basin, in close proximity to the Jubilee Field,’ and in a “water depth of 2,000 to 3,500.”

The move by GNPC comes barely two months after the corporation’s Chief Executive Officer, Nana Boakye Asafu-Adjaye had told participants at the 63rd Annual New Year School held at the University of Ghana, Legon, that it had embarked on a strategy to develop the necessary capability to become an excellent Operator that can independently manage oil and gas operations in the medium to long-term.

The strategy, according to him, was founded on four pillars, namely: “capacity building and expanding activities; replacing and growing reserves; efficient capitalization and optimum participation; and catalyzing local content development.”

The SDWT block, which covers an area of approximately 3,482km² (860,421 acres) has 2,612km² of 3D seismic data covering 75% of it, some of it shot as recent as 2009.

The Deepwater Tano basin, to which the block belongs, has so far yielded exploration success rate of 75%.

Adjacent blocks to the one being promoted, “play host to several significant oil, gas and condensate discoveries, including the Tweneboa-Enyenra-Ntomme  (TEN) – Tullow; Jubilee Field – Tullow & Co; Mahogany-Teak-Akasa (META) – Kosmos; Paradise (Hess); Dzata (Lukoil/Vanco),” the flyer by GNPC sighted by The Business Analyst states.

It is estimated that the block has over 1,500 Million Barrels of Oil reserves.

GNPC, according to inside sources, intends to partner an international player with a proven technical competence to operate in deepwater, and which has financial capability and a proven track record, to explore the block.

“You can’t take a novice and throw him into the deepwater,” Mr. Anthony Assiamah of the GNPC Exploration Department had told The Business Analyst in an earlier interview.

Interested industry players that want to further pursue a deal based on the highlights of the data viewed on the site, would be expected to apply to GNPC for a more detailed data, after which there is a follow-up discussion and an offer made for evaluation.

The Petroleum (Exploration and Production) Law, 1984, PNDC Law 84, provides that all companies, seeking to engage in any petroleum exploration, development or production activities in Ghana partner GNPC.

Section 2 (1) of the law states that ‘No person other than the Ghana National Petroleum Corporation established under the Ghana National Petroleum Corporation Law, 1983 (P.N.D.C.L. 64) in this Law referred to as “the Corporation”, shall engage in the exploration, development or production of petroleum except in accordance with the terms of a petroleum agreement entered into between that person, the Republic and the Corporation pursuant to subsection (4) of Section 5 of this Law or any other authority granted or recognized under this Law.’

Sources close to the process indicate that after the national oil company had evaluated and found a fitting partner, it would then enter into a joint venture along sound commercial lines before presenting an application to the Minister of Energy to negotiate for a petroleum agreement.

This would be in compliance with Section 2 (2) of the Petroleum (Exploration and Production) Law, PNDC Law 84, which provides that ‘Without prejudice to section 1 of this Law, any person who intends to negotiate for a petroleum agreement for the exploration, development or production of petroleum shall submit an application to the Secretary in accordance with such Regulations and such competitive bidding procedure as may be prescribed.’

GNPC, until recently, participated in the operations of oil blocks, at 10% carried interest.  However, since the production of the Jubilee Field, and following over ten other discoveries, there has been a national clamour that the national oil company upped its stakes in order to earn more revenue from the country’s oil resource.

For GNPC to become an Operator means it must have a majority stake in any joint venture it enters into to undertake that project.

Block History

The SDWT block, was on 24th October, 2008 awarded to Aker ASA of Norway, with 5% to CHEMU under a petroleum agreement that was subsequently deemed incompetent as it failed to meet the requirements of the petroleum exploration and production law, PNDC law 84.

A review of the Petroleum Agreement signed with Aker ASA, revealed that contrary to the requirements of the Petroleum Exploration and Production Law that a contractor either registered in Ghana or incorporated a company under the laws of Ghana that was not done.

That Agreement, was ratified by Parliament on November 5, 2008, and Aker ASA, got Aker Ghana Limited incorporated on October 29, 2008 with certificate of incorporation number, CA-51,646, to commence business on October 30, 2008.

A request by Aker ASA to assign its interest to Aker Ghana Limited was turned down by the Minister of Energy, Dr. Joe Oteng-Adjei by a letter dated December 30, 2009 insisting that was not possible since the original agreement was invalid.

“The assignment you have requested is legally impossible in view of the underlying failure of compliance with the law,” the Energy minister had observed, advising GNPC by a copy of the letter to reimburse Aker ASA with cost incurred in acquiring data, since such data acquired belonged to the national oil company.

Section 23(15) of the Petroleum Exploration and Production Law PNDC Law 84, states that a contractor (foreign company): “which is not an incorporated company in Ghana under the Companies Code, 1963 (Act 179) to be authorized to carry out solely petroleum operations in respect of which a petroleum agreement or petroleum sub-contract has been entered into under this Law and such signatory shall be a signatory to any petroleum agreement.”

“(b) maintain an office or establishment in Ghana to carry out petroleum operations and shall have in charge of such office or establishment a representative with full authority to act and to enter into binding commitments on behalf of the contractor or sub-contractor, as the case may be; and continues with subsection (c) that;

“In respect of such petroleum operations, open and maintain an account with a bank in Ghana.” All other oil companies operating in Ghana such as Kosmos Energy, Tullow Oil, Anadarko, Sabre Oil and Gas Holdings, had registered their companies under Ghana’s Companies Code, in compliance with the provisions of the law, prior to entering into petroleum agreements for their blocks.

Jubilee partner, Anadarko had cried foul over the award of the block to AKER ASA, saying the bidding process, in which it had participated was not conducted in a transparent manner.

[The print version of this article was first published in The Business Analyst of Wednesday, April 4th – Tuesday, April 10th 2012] – E-mail:[email protected]

From 3rd Ghana Oil & Gas Summit: LOCAL CONTENT IN FOCUS

By Agnes Chukwu [News Editor, The Business Analyst]

3rd Ghana Summit 2012
3rd Ghana Summit 2012

Various stakeholders and key players at the just ended Ghana Summit on oil and gas, deliberated on a number of issues, including Local Content development in relation to the industry, enumerating the developments, policies as well as the challenges faced by this industry in Ghana.

Local Content and participation according to the Ministry of Energy’s Local Content and Local Participation framework Policy, refers to the level of use of Ghanaian local expertise, goods and services, people, businesses and financing in oil and gas activities.

 

In a presentation on “Implementing Local Content in Ghana,” Afua Amissah, the Local Content Project Coordinator at the Ministry of Energy, disclosed that under the Ministry’s policy, all regulatory authorities, operators, contractors, sub-contractors and any other entities involved in any project, operations, activity or transaction in Ghanaian Oil and Gas Industry shall consider local content as an important element in their project development and management philosophy for project execution.

 

It further states that every project, operation, activity or transaction must have an Annual Local Content Plan. Such a plan, shall include all aspects of the Local Content framework discussed in this document and shall be assessed and revised annually. The implementation of the Local Content philosophy shall ensure measurable and continuous growth of Ghanaian participation in all aspects of the operations.

 

She further added that the Policy Framework states Government’s commitment to ensuring Ghanaian citizens participate in the ownership of businesses in the oil and gas industry. In this regard, the policy objective is to give first consideration to Ghanaian independent operators in the award of oil blocks, oil field licenses, oil lifting licenses and in all projects for which contract is to be awarded in the Ghanaian oil and gas industry, save that they must fulfill such conditions as the Minister will specify.

 

“In the case of non-Ghanaian ownership and operations, the entity must provide for the participation of a citizen of Ghana in an interest of at least five percent in the exploration and production activities under petroleum licenses. The interest of the citizen of Ghana shall not be transferable to a non-citizen

of Ghana,” the Policy states.

 

Furthermore, Ms Amissah said the Policy Framework mandates an Operator in the petroleum sub-sector to ensure that opportunities are given as far as is possible for the employment of Ghanaians having the requisite expertise or qualifications in the various levels of the operations.

 

“The Operator shall, within twelve months after the grant of a licence (or effective date of a Petroleum Agreement), submit to the relevant Regulatory Agency for approval, a detailed Annual Recruitment and Training Programme for recruitment and training of citizens of Ghana in all job classifications and

in all aspects of petroleum activities, which may be carried out in or outside the country,” she quoted.

 

Part III of the PETROLEUM (EXPLORATION AND PRODUCTION) LAW, 1984, PNDC Law 84, sub-titled Rights And Obligations Of Contractors And Subcontractors, states that a contractor or sub-contractor shall, in accordance with the Regulations and with the terms of a petroleum agreement or petroleum sub-contract, as the case may be, ensure that opportunities are given as far as is possible for the employment of Ghanaians having the requisite expertise or qualifications in the various levels of the operations.

It further stipulates that, a contractor or sub-contractor shall, as far as practicable, in accordance with the Regulations and the petroleum agreement or sub-contract use goods and services produced or provided in Ghana for his operations in preference to foreign goods and services.

 

Additionally, according to the Law, “a contractor or sub-contractor shall, in consultation with the Corporation, prepare and implement, in accordance with the Regulations and in accordance with the terms of any such petroleum agreement or petroleum sub-contract, plans and programmes for training Ghanaians in all job classifications and in all aspects of petroleum operations”.

 

Ms Amissah concluded by highlighting strategies to further enhance Local Content in the oil and gas industry, which include building local capacity of the people, providing educational support in the Universities and Polytechnics, establishing Small and Medium-Scale Enterprise (SME) Centre in the Western Region as well Monitoring and Governance.

Concerns

Responding to concerns raised after her presentation, about the need to upgrade the capacity of staff working on the oil rig, she pointed out that the Maritime University trains students on all these technicalities in order for them to be well-equipped in handling the systems.

Also, to a suggestion by a delegate from Expro that more opportunities be given to students in the second cycle institutions in order for them to be better positioned in the job market as far as the oil and gas sector is concerned, Ms Amissah said Government was working with the Technical and Vocational Institutes by drawing new time tables that will include subjects and courses in oil and gas.

The Local Content session, which was chaired by Willy Olsen, former advisor to the President and CEO of Statoil and also Senior Advisor to INTSOK, focused on local content development successes, development and training of SMEs in Ghana, Ensuring local content in oil operations in Ghana and educating Ghanaians on how to position themselves in the industry.

Other speakers on the Local Content Seminar included, Dr. Stephen Kudom Donyinah, Lecturer, Department of Chemical and Petroleum Engineering, KNUST, and Hakon Hynne, Senior Research Scientist, SINTEF.

[The print version of this article was first published in The Business Analyst of Wednesday, April 4th – Tuesday, April 10th 2012] – E-mail:[email protected]

Ghana Moves to Become Hub for Rapid Oil Spill Response

By J. Ato Kobbie, Managing Editor [The Business Analyst]

Even as Ghanaians wonder about the level of the country’s preparedness in responding to oil and oil-related spillage, environmental experts are already looking at Ghana becoming the hub for rapidly responding to such incidents in the West African sub-region.

Disclosing this to participants on the second day of the three-day Ghana Summit on oil and gas held at the Accra International Conference Centre (AICC) last week, Mr. Kojo Agbenor-Efunam, Principal Programme Officer (Oil and Gas) of the Environmental Protection Agency (EPA), said recent industry activities and discoveries in other West African countries such as Liberia and Sierra Leone, have increased risk levels and therefore stakeholders have been discussing the need to pool resources together to effectively respond to any spillages.

In a presentation that focused on Ghana’s capacity building and preparedness to dealing with oil spillage, Mr. Agbenor-Efunam said following initial studies undertaken as far back as 1986, with the assistance of the International Maritime Organization (IMO), to assess the country’s risk level, the country started building capacity for dealing with any eventual oil spillage.

According to him, the study, which covered the country’s 550 kilometres of coastline, helped in determining the ecological diversity, the brisk economic activities along the coast, which is densely populated with important cities, revealed the country was at risk and risk zones were determined.

He said these findings led to national contingency plans being mapped out among stakeholder institutions, such as the Ghana Maritime Authority (GMA), Ghana Ports and Harbours Authority (GPHA), Ghana National Petroleum Corporation (GNPC) and the EPA among others.

He said it was recognized that in times of a spill, it was not the magnitude of the spill that was problematic but the management aspect of it.

“For example if you did not know the resources that are much vulnerable to the oil spill, and then you go in to respond, you may end up damaging the environment, more than leaving the crude, which by nature could evaporate by itself over time,” he revealed.

He said Ghana’s identification of its resource risk areas, is crucial for determining how spillage at any particular point would impact on the environment and therefore how it ought to be contained or dealt with.

Responding to suggestions that since there had not been any practical experience in dealing with oil spillage, Mr. Agbenor-Efunam said response comes when there is a disaster and as no one wished for a disaster, it was important to engage in exercises or learn from occurrences elsewhere.

Stressing on the importance of regular exercises, he said knowing what to do and who to call in the event of a disaster are very critical.

“It does not matter what kind of experience you have had in oil spill; every single spill is quite different; even if you had a spill in the past and you managed it the next one could be different and would require different responses,” he asserted.

The private sector is also involved in the combat readiness, possibility of two private companies with logistics ready for deployment are being  looked at, whiles a bill currently before Parliament would also strengthen the country’s readiness.

He said local capacity building was ongoing, currently focusing on Western, Central, Greater Accra and Volta regions, especially under a five-year assistance from the Norwegians, which has emergency preparedness as a key component, together with support from the World Bank, under its Oil and Gas Capacity Building Project.

It was revealed also that there are complexities as far as the determination of maritime boundaries in the Gulf of Guinea are concerned and ECOWAS states have made representation to the United Nations to work together in overcoming them in a harmonious manner.

On his part, Phil Wahwerit,  EHS Manager of Tullow Ghana Limited said the company has an elaborate oil spill solutions, with onshore and offshore components.

He highlighted oil spill response capabilities that included 100% onshore redundancy of offshore equipment and continuous offshore deployment exercises as well as both onshore and near-shore exercises.

He indicated that even though it is an offence to enter the exclusion zone around rigs, which is 500 metres from FPSO Kwame Nkrumah, some fishermen still flouted the law, cautioning that it exposed themselves and the rig to danger. 

He said the Jubilee Operators have equipment and trained staff with the capacity to deploy them in the event of an oil spillage and that 76 sensitivity areas have been identified.

The session on environment, which was chaired by Jonathan Allotey, Director of the Centre for Sustainability, Environment and Planning, focused on areas such as positioning Ghana as an oil spill response hub for the sub region, the importance of establishing local partnerships between oil industries and national authorities in charge of oil spill preparedness.   

Other areas covered were, regional agreements, promoting exchange and mutual assistance for oil spill response; the protection, management and development of marine and coastal environment of Ghana.

Other speakers were Lawrence Apaalse, lead Petroleum Geologist at GNPC and also Co-ordinator, Ghana National Continental Shelf Delineation Project, and Capt. Inusah, who represented the Director-General of the GMA, Issaka Peter Azuma.    

[The print version of this article was first published in The Business Analyst of Wednesday, April 4th – Tuesday, April 10th 2012] – E-mail:[email protected]

Ghana Summit 2012 Exhibitors Impressed …And Organisers too

By Agnes Chukwu, [News Editor, The Business Analyst]

3rd Ghana Summit 2012
3rd Ghana Summit 2012

Many exhibitors at the recently held 3rd Ghana Summit on oil and gas, have expressed satisfaction at the turn-out of the 2012 event, and look forward to participating in future ones.

The 3rd Ghana Summit saw in attendance various local and international companies in the oil and gas industry, such as the Ghana National Petroleum Corporation (GNPC), Tullow Ghana Liited, Kosmos Energy, Expro, Vitol, Lukoil, ENI, FMC Technologies, Baker Hughes, Halliburton, among others.

In an interview with The Business Analyst, a representative from Baker Hughes, said the company, which has been in Ghana since 2009, provides drilling and evaluation, completions and production, pressure pumping, downstream service, fluids and chemicals as well as reservoir development services.

She added that hiring and developing local talents and investing in infrastructure are key targets in the company, which has renovated the old tobacco building into its office in the Western Region.

She stated also that Baker Hughes is serious about community  involvement in projects, thus have supported the Sekondi School for the Deaf since 2009 with renovating the school by re-painting the dormitories, refurbishment and maintenance, creation of a computer lab and other initiatives for the school.

On local content development, a publication from the company revealed that Baker Hughes promotes the utilization of local services and products, wherever possible, to stimulate and provide economic growth and stability to the local economy. Currently, the publication stated, approximately 40% of the BHI work force is Ghanaian and steady growing.

For Expro, which has been in the country for two years providing services and products such as well testing and commissioning, production systems, wireline intervention, connectors and measurements, and deepwater intervention.

With regards to local content development, the company has its focus on training and development of graduates from the universities and polytechnics, through a personnel support programme that runs for two years, after which qualified candidates become fully employed by the company.

Also present at the exhibition, was Aquatec Marine Services Limited, a local company formed in 1990 as a Ghanaian-based diving company, carrying out both inshore and offshore services, such as underwater photography, inspection, haul cleaning and oil spillage services.

Speaking to The Business Analyst, Jack Hoffman disclosed that the company is the sole distributor of Castrol Marine Lubricants since 1999, having in stock a wide range of lubricants, oil and grease products.

In addition, Ropetec, a rope access company, which employs only the use of ropes to work both onshore and offshore, was present at the Exhibition.

The company, which is a year old in Ghana, has its head office in Dubai, its operations in Cape Town, South Africa and has branches in Angola, Congo, Nigeria, Namibia and the United Arab Emirates.

According to Joseph A. Manlenze, the future for Ropetec was bright.

‘This summit helped to establish ourselves as well as to advertise ourselves on what we do and who we are,” he disclosed.

On local content, he stated that the company has a high Ghanaian base, providing Ghanaians with more opportunities to work in their company.

With regards to Corporate Social Responsibility, he emphasized that the company is currently running a project in the Western Nzema Area-Jomoro District-where it has a Computer Training Centre and a Library Complex for children, with beneficiaries ranging from pre-school, Junior High School (JHS) to Senior High School (SHS) students.

The 3rd Ghana Summit on Oil and Gas which assembled operators in Ghana’s oil and gas industry as well as suppliers and service providers was held at the Accra International Conference Centre (AICC) on Tuesday 27th March – Thursday, 29th March, 2012.

and was organized by CWC, with Kros Ghana Limited as local partners.

“3rd Ghana Summit 2012 was a marked improvement over the previous years’,” Yaw Kankam, CEO of Kros Ghana Limited, local organizing partners to CWC, told The Business Analyst, adding that “next year is going to be bigger!”

He said he was particularly impressed by the participation of Ghana National Gas Company (Ghana Gas), which attracted a lot of interest from participants and grateful to the company for being present to respond to participants’ questions.

He disclosed that 30% of the total exhibitors to this year’s Summit have already booked their stands for the next Ghana Summit to be held in 2013.

[The print version of this article was first published in The Business Analyst of Wednesday, April 4th – Tuesday, April 10th 2012] – E-mail:[email protected]

Sufficient Gas to Come by May End- NNPC

Fueling Ghana’s thermal plants to end power outages

 

By Agnes Chukwu [The Business Analyst]

 

 

Mr. David Ige, Group Executive Director of NNPC
Mr. David Ige, Group Executive Director of NNPC

The Nigerian National Petroleum Corporation (NNPC) has given assurance that current gas supply shortfalls from Nigeria to neighbouring Benin, Togo and Ghana would be over by the end of May.

 
In an exclusive interview with The Business Analyst, Group Executive Director of NNPC, Mr. David Ige explained that recent challenges with the country’s supply to Ghana was because one of the two major supply plants had a problem and had to be shut down, but had resumed operations and within six-to-eight weeks will resume gas supply to the entire region.

 
Mr. Ige, who was speaking to the paper on the sidelines of the West African Gas Stakeholders Forum held in Accra last week, said even though Nigeria is supposed to be supplying 130million cubic feet of gas to the entire region, it is currently supplying only 70-80 million cubic feet but was hopeful that by the end of May it will resume full supply.

 
He observed that Nigeria has made significant progress in supplying gas through the West African Gas Pipeline (WAGP) despite the challenges.

 
Additionally, Mr. Ige disclosed that infrastructure was key to economic integration and to the flow of gas but added that infrastructure alone does not answer the question, but regional and local market development and the integration of those markets are actually very critical elements to the successful integration across the entire region.

 
“If you look at Nigeria, which is the critical supplier in the region, five years ago, we had essentially a zero gas market and it has taken us over the last five years to be able to build a gas market; the experience of that shows us that building a gas market is perhaps more complicated than building a gas infrastructure”, he said.

 
He intimated that to an extent explained why some of the flow of gas to Ghana today is not as prolific as expected but it is not unusual because we have the benefit to look into the future, referring to where advanced markets like the European and the American markets were when they started, which shows that this is a natural cause of evolution.

 
“The steps we are taking in Nigeria to rapidly build a gas market, which will stabilize the flow of gas into the region, I believe that very shortly we will see stability in supply and a significant boost in gas supply to the region”, he disclosed.
He said one o the things that the country had done over the last three to four years to boost the gas market in Nigeria, is specifically a major effort in building the commercial framework for gas, as gas essentially needs a very credible commercial framework for it to work.

 
“That didn’t exist in Nigeria prior to now but we are beginning to put that in place and that is a critical element for there to be a functioning gas market that can supply gas and consume gas in a sustainable manner,” Mr. Ige asserted.

 
He intimated that one of the critical policies in Nigeria relates to the establishment of a commercial framework where the price for gas is adequately determined, commercial contractual arrangement to assure gas flows are being put in place and more importantly a network code which will govern access to gas infrastructure both domestically and internationally are all being put in place.
“The combination of all these things will take a while to materialize but we are making very good progress in those steps and you will begin to see a significant manifestation of these efforts in Ghana and the region”, he said.

 
Responding to The Business Analyst’s inquiry as to why with so much oil and gas in Nigeria it still experienced epileptic power supply in the country, Mr. Ige said the situation was caused by mistakes made in the past and that the country was taking measures to bridge the shortfall by providing enough energy for the country and also meeting their contractual obligations to the sub-region.

 

The print version of this article was published in The Business Analyst of Wednesday, March 28 – Tuesday, April 3, 2012 E-mail: [email protected]

OIL & GAS GURUS BRAINSTORM IN ACCRA

……with local content high on Agenda

…….As Gas prospects excite participants
…….And Gov’t upbeat about oil becoming a blessing

By Agnes Chukwu, News Editor [The Business Analyst]

 
Speakers at the opening ceremony of Ghana Summit, a platform that has brought together players, prospectors and potential investors in the oil and gas sector under one roof at the capital’s Accra International Conference Centre on Tuesday, were hopeful that by the end of the three-day conference and exhibition, solutions would have been found to some challenges identified with oil exploration and production.

 
As far as Ghana’s Deputy Minister of Energy (Petroleum), Honourable Emmanuel Armah-Kofi Buah, was concerned, “For this nation the issue should not be whether the oil and gas resources will be a blessing or a curse; it is imperative that the oil and gas resources be a blessing and nothing else!”

 
For him the active involvement of Ghanaians in the oil and gas industry through local content and participation has become a major policy issue for Government, hence the Ministry of Energy taking steps to ensure that this goal is achieved in order to increase local value-added investment, skills development and technology transfer through a clear and robust local content and local participation policy.
He emphasized that the purpose of this policy is to progressively and comprehensively integrate Ghanaians into all aspects of the oil and gas industry, thereby maximizing the benefits to Ghanaians.

 
“We hope to see the development of local capabilities in the oil and gas value chain through education, transfer of technology and know-how, active research and development activities,” he said.

 
He disclosed that the policy is currently being drafted into a legislative instrument to give it the needed legal backing and would be put before the public for scrutiny prior to Parliamentary enactment.

 
He was hopeful the summit will serve as a platform for devising strategy for Ghana to derive maximum benefits from the natural resources that the country is blessed with, not just for oil and gas.

 

ENVIRONMENTAL ISSUES
Minister of Environment, Science and Technology, Ms Sherry Ayittey, acknowledging that exploring for oil and gas and the production activities which follow a successful exploration programme presents some risks and potential impact on the environment, must have come as heartwarming to environmentalists, who have been on high alert, especially following the recent oil spillage in the Gulf of Mexico.

 
“Identifying these risks and impacts and devising detailed management plans to avoid, prevent or minimize them is the vital and integral part of planning these exploration and production activities” she disclosed.

 
She emphasized that there has been an increase in petroleum activities due to the recent find, and added that this upsurge in petroleum activities in the country calls for prudent management of the sector to ensure environmental sustainability of the oil and gas sector, which provides impetus for economic growth, without compromising the nation’s environment.
“It is therefore imperative that for a sustainable oil sector there is the need to put in place an efficient and effective environmental management plan that seems to mainstream environmental management, health and safety and community issues into the petroleum sector operations. Legal, institutional and policy framework are necessary for dealing with these challenges and also more of the social impact assesses” she added.

 
She disclosed that the Environmental Impact Regulation 1999 LI 1652, is an instrument to guide all development, including the oil and gas sector. She added that the LI 1652 makes it mandatory for oil and gas companies to have permits before commencement of any activity.

 
“Ghana Oil and Gas resources development is currently at its nascent stage that is why the country is making every effort to ensure that the petroleum sector contributes to the present and future needs of Ghana, while keeping a balance between economic development, environmental protection, social responsibility and safeguard good condition for work,” she added.
JOBS

 
Also present at the Summit, was the Minister of Employment and Social Welfare, Honourable Moses Asaga, who stated that his ministry, as the regulator and the policy maker for labour, found the summit very refreshing and at the same time challenging.
“With the burgeoning oil and gas sector growing, there will be new challenges that the ministry will have to meet and this will include the development of new skills, training of graduates, looking at a new curriculum in the universities that will make sure that the Ghanaian education fits into this oil and gas industry, particularly with the development of the technical institutions like the Kwame Nkrumah University of Science and Technology (KNUST) and all the other Polytechnics that we have in Ghana, ” he said.
He stated that one of the themes of the current government is Job Creation and as such his ministry finds the oil and gas sector as an opportunity and a window for creating employment because of the investments that are coming in and the numerous exploration and production companies as well as oil and service companies.

 

GHANA GAS – Petroleum C’ssion

The Vice President of the Republic of Ghana, John Dramani Mahama, who officially opened the summit stated that Ghana has so soon transited into an oil economy and even though the contribution of oil revenue to GDP is still significantly small, it is easy to see that it gives Ghana the opportunity and the potential to be able to transform not only this economy but also the quality of life of its citizens in a really shorter time than it would have taken our dependent on traditional commodities.
“We consider the oil and gas sector to be a significant part of Ghana’s socio-economic progress and we are seeing seemingly increasing investment in that particular sector both from the private sector and also investments that are mobilized by the government and companies themselves”, he disclosed.

 
He expressed excitement about developments at the gas front, commending the Ghana National Gas Company (Ghana Gas), for hitting the ground running as gas would allow the government to achieve its vision in the energy and power sector of increasing Ghana’s power production to 5000MW by 2015, and establish Ghana solidly as a net exporter of power to other countries in the West African power pool.

 
“More importantly and aside from that it also allows us to set up a downstream industry in the petrochemical sector that will allow us to produce fertilizers and other such products that are an off-shoot of the gas industry” , he added.
He further acknowledged the need to strengthen the legislative regime governing the sector, as well as fast-tracking the capacity-building of the Petroleum Commission to enable it carry out its work.

 
Speaking on the resource curse and how to avoid it, the chairman of the Petroleum Commission, Professor Ivan Addae-Mensah, stressed on the need for providing alternative livelihoods for the locals in the areas which contributed most to the country’s revenue.
Drawing from the examples of the adverse effects of gold mining on communities where such precious metals are extracted, he cautioned that the socio-economic impact of neglect of such communities could lead to a social explosion.

 

LOCAL CONTENT MAKES BUSINESS SENSE
President and General Manager of Jubilee Field Operator, Tullow Ghana Limited, Dai Jones, stressed on the importance his outfit attached to local content and capacity building, which he said was not just the right thing to do, but commercially sensible as it comes also at competitive costs.

 
Theo Ahwireng, the Geophysics Manager of the Ghana National Petroleum Corporation (GNPC), called for support of the national oil company as it aspires to the status of the Norwegian and Brazillian national oil companies.

 
He said there have been 16 discoveries since 2007 and the sector has been very vibrant since, disclosing that six out of the last nine exploratory wells drilled resulted in discoveries.

 
A resource person from Ecobank believes with indicators rating Ghana’s economy and competitiveness high, as well as potential oil reserves putting the country in third place behind Nigeria and Angola as far as oil production in sub-Saharan Africa was concerned, underlies the country’s attraction as the destination for investors.

 
Welcoming participants on the opening day, Yaw Kankam, CEO of Kros Ghana Limited, the local organizing partners to CWC, was excited that Ghana Gas which was set up only last year was going to be present to shed light on developments at the gas front.

 

The print version of this article was published in The Business Analyst of Wednesday, March 28 – Tuesday, April 3, 2012 E-mail: [email protected]

JUBILEE FIELD PUMPS 30MB

By J. Ato Kobbie, Managing Editor [The Business Analyst]

 
Crude oil lifted from Ghana’s Jubilee Field, over the weekend crossed over the 30-millionth barrel of Jubilee Oil, since the field started production on November 28, 2010.

 
The 30 millionth barrel pumped from the field was reached following the successful lifting of the 31st cargo of about 990,000 barrels of the light sweet crude oil from the field by Anadarko & Sabre Oil and Gas Limited , bringing the total crude lifted from the field to over 30,300,000.

 
Jubilee operator Tullow Oil’s lifting of 996,358 barrels on 2nd March, 2012 brought the total lifting to 29,327,955 and with a favourable world crude price hovering above the $120.00 per barrel mark, partners have been lifting around their maximum allowable cargo of 997,500.

 
The Anadarko- Sabre Oil Group parcel of about 997,500 barrels lifted over the weekend sent total crude oil lifted from Ghana’s Jubilee Field, crossing over the 30-millionth barrel, since the field started production on November 28, 2010.
The successful lifting of the 31st cargo of about 997,500 barrels of the light sweet crude oil from the field by Anadarko & Sabre Oil and Gas Limited, brought the total crude lifted from the field to over 30,300,000.

 
Jubilee operator Tullow Oil’s lifting of 996,358 barrels on 2nd March, 2012 had sent the total lifting to 29,327,955 and with a favourable world crude price hovering above the $120.00 per barrel mark, partners are expected to be lifting their maximum allowable cargo of 997,500.
Ghana, which is the last to lift in the schedule of lifting, is billed to round off the current round with the 32nd cargo of 997,500 barrels of Jubilee oil, which would be its sixth cargo, around the 2nd of April.
Ghana has so far lifted 4,926,673 barrels and therefore its sixth cargo would bring the country’s total lifting to date to about 5,924,173 barrels.

 
Field Operator, Tullow Ghana Limited, has so far lifted the highest quantity of Jubilee Oil of 10,609,113 barrels, followed by Kosmos Energy with 6,901,950 barrels, with the Anadarko – Sabre Oil & Gas Holdings group raking in 6,890,219.
Production from the field, which started at a daily rate of less than 40,000b/d rose steadily to 85,000 b/d sometime last year, before it declined to below 80,000 b/d rate, registering a shortfall of a third of the projected plateau for 2011.

 
Jubilee Operator, Tullow Ghana Limited in November 2011 reported that “production rates have been below expectations due to mechanical issues in certain wells related to the design of the well completions,” adding that such problems were not unusual for a new field development of this type and remedial work was ongoing.
The Jubilee Field is currently produced by the floating production, storage and offloading FPSO Kwame Nkrumah MV 21 vessel, owned by the partners.

 
The Jubilee partners are already implementing Phase 1A development of the field, to boost production to the 120,000 barrels per day capacity of FPSO Kwame Nkrumah MV 21. [email protected]

WHY GHANA BOUNCED KOSMOS

In the Matter of Dispute Over Oil Search

By J. Ato Kobbie, Managing Editor, [The Business Analyst]

 


Ghana’s case in the matter in which the Minister of Energy, Dr. Joseph Oteng-Adjei, rejected a plan of development (POD) submitted by Kosmos Energy on a Mahogany East field, as well as turning down a force majeure invoked by the US oil independent in July, 2011, appears to be water-tight.
Mahogany Discovery
It all started when Kosmos Energy, on January 8th, 2009 announced the discovery of oil by its Mahogany-3 Well in the West Cape Three Points Block (WCTP) offshore Ghana.
Under the terms of the Kosmos-operated WCTP petroleum agreement (PA), the Minister is to be notified of any discovery made and Contractor (Kosmos) shall conduct appraisal in respect of such discovery to determine whether the discovery is commercial or not.
If the discovery is declared commercial then Contractor shall submit a Plan of development (POD) to the Minister of Energy for approval.
Kosmos, after notifying the Minister of Energy of the Mahogany discovery, undertook an initial appraisal, via Mahogany-4 well, following which it notified him that the initial area of the discovery was commercial.
Kosmos therefore proceeded to submit a POD over that area and also requested for an extension of the appraisal period to enable it conduct further appraisal work on areas outside this initial area.

 
Sources close to the Ministry of Energy indicated that the Minister, Dr. Joseph Oteng-Adjei had granted the extension requested by Kosmos, directing the company to submit a full development plan for the Mahogany discovery, with liberty to apply for further extension to clear any uncertainties that remained.

 
According to the source, the Minister was shocked when upon completion of the extended appraisal, Kosmos, instead of complying with his directive as stated above, submitted a POD for a ‘Mahogany East’ area (having carved out the eastern end of the Mahogany field) to him for approval, when there was neither a discovery called ‘Mahogany East’ nor a commerciality declared for it.
The source indicated that Dr. Oteng-Adjei had no difficulty at all, in rejecting this POD, as he had not been previously notified of a ‘Mahogany East’ Discovery and worse still, a conduct of appraisal activities within the development, as Kosmos had incorporated in that plan, never represented an efficient way of exploiting the resources.

 
Kosmos, however maintained that it had submitted the right documentation and subsequently issued a notice of dispute, which required consultation between the parties to resolve the matter, failing which any party may refer the matter to arbitration for settlement.

 
A request by Kosmos that the Minister gave conditional approval of the POD as it was, was turned down as Government and the Ghana National Petroleum Corporation (GNPC) did not find it acceptable since it still required the Minister to approve a POD when both the Contractor and GNPC had agreed there was the need for further appraisal work to reduce uncertainties that characterized the discovery.

 
The Minister and GNPC insisted that it was necessary that the appraisal was conducted before submission of a POD, as required by the terms of the PA, pointing out also that a comprehensive appraisal when undertaken would reveal also if there was dynamic communication between the Mahogany discovery and the Jubilee Field to necessitate a separate development of Mahogany or not.
It would be recalled that Mahogany-1 exploratory well, was the first Jubilee discovery by Kosmos, and was appraised by the Mahogany-2 well.
CEDRELA

 
In announcing the dispute surrounding the drilling of the Cedrela-1 exploration well, Kosmos, in a press release on July 7th, two weeks to the expiration of its exploration license, stated it had delivered a force majeure notice to the Government of Ghana and GNPC, following an incident that rendered Transocean Marianas, a semi-submersible drilling rig, which it had contracted to drill a well within its WCTP block, inoperable.
But Ministry of Energy and GNPC sources had told The Business Analyst that there was no basis whatsoever to invoke a force majeure as Kosmos was under no obligation to drill the Cedrela-1 exploration well it intended to drill with the Transocean Marianas. [See The Business Analyst, July 13, 2011]

 
According to the sources, Kosmos, after meeting its work obligation under the PA, proposed to drill an additional exploration well prior to the expiration of its Exploration licence on 22nd July 2011.
The sources point out that even though at the Joint Management Committee (JMC) level the drilling of Cedrela was rejected and voted against by GNPC due to lack of technical and economic justification by Kosmos, it still proceeded with steps to carry it through.
Reasons for rejection
The government of Ghana and GNPC, however countered the force majeure invocation by Kosmos on the grounds that it was under no obligation to drill the well.

 
The Ghana team argued further that the cedrela-1 well was not a permitted activity as it was not unanimously approved by the WCTP joint management team, as required under the PA.

 
Team Ghana again argued that even if the well had been obligatory, no work had in fact commenced and as such force majeure cannot ‘be invoked to enable an extension of the exploration period.’

 
Kosmos, however, maintained that Cedrela was an approved activity and that the events surrounding the rig constituted force majeure, for which reason the exploration period had to be extended, hence issuing a notice of dispute.
The petroleum agreement covering the WCTP block was signed on July 22nd 2004 with a seven-year exploration period, which ends on July 21, 2011 after which the US company and its partners automatically relinquish areas that are not deemed to be ‘Discovery, Development or Production areas, except where a force majeure (an act of God) had altered the time frame.’
A force majeure, which is also termed an Act of God, is an event which cannot reasonably be anticipated or controlled by parties to a contract and which makes it impossible to fulfil an obligation under the said contract.
Reporting on the dispute in its filings with the US Securities and Exchange Commission (SEC) Kosmos had stated that together with the WCTP Block partners, they were in discussions with the Ministry of Energy and G N P C to resolve differences on the issues in dispute.
Sources close to the Ministry of Energy confirmed that discussions were still ongoing to resolve the differences.
Kosmos, holds an 18% interest in the Deepwater Tano (DT) Block, and on February 23, 2012, exercised a right to accept the terms and conditions of the proposed transfer of Sabre Oil and Gas Limited (“Sabre”) 4.5% interest in the DT block, under the DT Joint Operating Agreement, which gives each of the Block partners a right of first refusal regarding the transfer of such interest to a third party, assuming the block partner is willing to match the terms and conditions.

 
Kosmos says it expects that transaction, which is subject to Government of Ghana consent, to close during the second quarter of 2012, which would increase its interest in the DT Block and Jubilee Unit to 22.05% and 25.82258%, respectively.
Kosmos, however, have to shrug off competition from the Petroleum, Oil and Gas Corporation of South Africa (SOC) Limited (PetroSA), which has a pending sale and purchase agreement with Sabre Oil and Gas Holdings related to the shares.

 
Under an Unitisation and Unit Operating Agreement (UUOA) signed among the Jubilee Partners on July 13, 2009 with the Ministry of Energy, GNPC and the partners in the two blocks (WCTP and Deepwater Tano), the discovered fields have been jointly developed to optimize resource recovery.

 
“Tullow Oil became the Unit Operator, with Kosmos Energy as Technical operator. The Jubilee field is currently producing crude oil at about 70.000 “barrels/day and straddles the WCTP and DT blocks. The field, which was expected to peak at 120,000 barrels per day in 2011, did not meet the production target.

 
In June 2007, the Mahogany-1 well, which was Kosmos’ first exploration well within the WCTP block, discovered oil in large commercial quantities, followed two months later, in August, by the Hyedua-l well, just across the block in Tullow Oil’s DT block also striking oil in sizeable quantities. The two fields were unitised in 2008 for joint development as the Jubilee Field, after successful appraisals. Jubilee Oil is being produced by the floating production, storage and offloading Vessel Kwame Nkrumah MV 21, offshore western Ghana. Tec h n i c a 1 Production commenced from the Jubilee Field on November 28, 2010 and the field was officially commissioned for First Oil on December 15 of the same year.

 
The Jubilee Partners have among them nine discoveries since Jubilee, which are at various stages of development.
A Notice of Dispute “establishes a process for negotiation and consultation for a period of 30 days (or longer if mutually agreed) among senior representatives from the Ministry of Energy, GNPC and the WCTP Block partners to resolve the matter,” Kosmos reports, adding that the issue continues to be discussed in an effort to reach a mutually agreed upon resolution among the parties.
Settlement Agreement.

 
In a previous Kosmos Energy and Ghana dispute, the parties entered into a settlement agreement in December 2010, just days to the former’s filing of notice with the US Securities and Exchange Commission (SEC) towards its initial public offer of shares on the New York Stock Exchange (NYSE), after over a year-long battle with the national oil company, GNPC and the Ministry of Energy. [email protected]

TECHNOLOGY IS THE LINK – Dr. Sackey

Bridging the Industrial Gap Technological

 

A Senior Lecturer of the Mechanical Engineering Department of the Kwame Nkrumah University of Science and Technology, Dr. Samuel Mensah Sackey, has advocated for the creation of a Science, Engineering, and Technology Strategy Council, to accelerate the country’s drive towards self-sustaining technological capability.

 

 

“As a matter of urgency, Government should create a Science, Engineering, and Technology Strategy Council to oversee, coordinate, and advise government on all issues related to the application of science and engineering towards the development and realisation of an indigenous self-sustaining technological capability in the country comparable to the newly industrialising countries,” he asserted.
Dr. Sackey, who was speaking as the Guest Speaker at his alma mater, Accra Academy’s 81st Speech and Prize-Giving Day, on the topic, ‘Consolidating the Development of Ghana through the Power of Information and Communications Technology (ICT),’ further proposed that such a council, which should be non-partisan in its work, when created, should be well-resourced and must report directly to the President of the land, or at the very least, the Vice President.

 
He said additionally, Ghana needed to raise its national investment in Research and Development to at least 1.0% of GDP.
Dr. Sackey said this was necessary to ensure that the country caught up with engineering design and manufacturing, which is at the centre of all industrial activity, as this makes possible the design and production of plant and equipment, capital and consumer engineering products, and provides engineering services to all sectors of the economy.
“No industrialised country has missed out on the engineering design and manufacturing industry,” he stressed, adding that “If the Government could get the engineering design and manufacturing industry going, it would have established a strong foundation for the development of a domestic industrial base.

 
“Progress cannot happen without a corps of well motivated skillful engineers and scientists at the forefront of the process of creating a manufacturing base, able to design and manufacture capital products comparable to what happens in Asia.”
Dr. Sackey, who is the KNUST’s representative on the European Union – Africa Tuning project, which seeks to harmonise educational structures and programmes across Africa, to enhance student and staff mobility as well as graduate employability, across borders, also represents the university on the Suame Magazine Industrial Development Organisation (SMIDO).

 
He recommended the composition of the council he proposed, to comprise of an industrialist, savvy in manufacturing, engineering, and technology; an experienced academic, well versed manufacturing and industrial technology and its trends in the modern world; an economist, savvy in issues related to manufacturing; and a registered capital goods design and manufacturing practitioner;
Furthermore, he recommended for a representative of the Ministry of Environment, Science, and Technology, who is a scientist, an engineer, or a technologist; a representative of the Ministry of Communications who is an ICT professional; a representative of the Ministry of Trade and Industry, who must be an engineer; a representative of a leading University of Science and Technology; and a representative of the Council for Scientific and Industrial Research
He said it was as a result of the country’s lack of technological capability that it has to depend on foreigners to come and exploit its resources such as gold and oil.
Recalling various failed strategies at industrialisation, Dr. Sackey said the remedy lies in harnessing the power of education and skills development in human capital formation to underpin technological capability in strategic areas of the economy.
Dr. Sackey, who gave insight into how technology can revolutionalise the country, acknowledged contributions by the private sector, citing Soft Tribe, for pioneering software that has promoted and stimulated the growth of software development in the country and beyond.

 
“Another is Esoko, a Ghanaian firm that markets ICT solutions to agri-businesses via mobile phones in over 15 African countries; yet another is RLG Communications, a Ghanaian integrated ICT company that assembles the rlg brand of ICT products including mobile phones, laptops, internet modems, LCD TV screens and internet routers,” he commended.
He called for the efficient management of ICT policies for efficient benefits to teachers, students and businesses.
Dr. Sackey, is a member of the 1981 year graduating students, who hosted this year’s speech and prize-giving day event. [See full presentation on centre spread].

 
In a quick response to some of the concerns raised by the Guest Speaker, Mr. Ben Eghan, Secretary to the Cabinet and a 1966 graduate of the school, highlighted some ongoing projects and programmes in the area of ICT for efficient running of government business.
He cited ongoing networking of ministries, departments and agencies across the regions through ICT and how public records were currently being converted to retrievable electronic forms under a similar programme.
He also emphasised the importance of science and technology, explaining that while science enabled us to understand our environment, it is technology that enabled us overcome challenges that the environment presents.
The school presented awards to retiring and serving teachers as well as students for academic excellence.
Among the awardees was Mr. David Ackwerh, who has taught in the school for 30 years, during which period he had additionally held various offices.
Present at the event also were heads of other secondary schools as well as old students and parents.

Credit:[email protected]

Kosmos Reports on Disputes

By J. Ato Kobbie, Managing Editor [The Business Amalyst]

Two notices of dispute, fired by Kosmos Energy, Ghana’s West Cape Three Points (WCTP) Block Operator, to both the Ministry of Energy and the Ghana National Petroleum Corporation (GNPC) on June 30, 2011 and August 24, 2011 respectively, stand out as areas of conflict between the US independent oil company and Ghana in its 2011 annual report filed with the Securities and Exchange Commission (SEC) on March 1, 2012.

Kosmos, the Jubilee Field Technical Operator, filed the annual report, in compliance with requirements for listing on the New York Stock Exchange (NYSE), where it enlisted last year, detailing its performance in the year, as well as plans for the coming years.

The first notice of dispute has to do with disagreement over the denial of consent to a plan of development (PoD), whilst the second relates to Kosmos’ inability to drill a Cedrela-1 exploration well, just before its 7-year exploration licence on WCTP Block expired.

Kosmos, which operates the WCTP block with 30.9 % interest, indicates that together with the block partners, it was in discussions with the Ministry of Energy and GNPC to resolve these differences.

According to Kosmos, the Mahogany East area, which is a combined area covering parts of the Mahogany discovery and the Mahogany Deep discovery area, was declared commercial in September 2010, and a PoD was submitted to Ghana’s Ministry of Energy as of May 2, 2011.

It said “In a letter dated May 16, 2011, the Minister of Energy did not approve the PoD and requested that the WCTP Block partners take certain steps regarding notifications of discovery and commerciality; and requested other information.

“The WCTP Block partners believe the combined submission was proper and have held meetings with GNPC which resolved issues relating to the PoD work program.”

Continuing, Kosmos said, “From May 2011, the Ministry of Energy, GNPC and the WCTP Block partners continued working to resolve other differences; however, the WCTP PA contains specific timelines for PoD approval and discussions, which expired at the end of June 2011.”

According to Kosmos, “On June 30, 2011, we as Operator of the WCTP Block and on behalf of the WCTP Block partners, delivered a Notice of Dispute to the Ministry of Energy and GNPC as provided under the WCTP PA, which is the initial step in triggering the formal dispute resolution process under the WCTP PA with the Government of Ghana regarding approval of the Mahogany East PoD.

“This Notice of Dispute establishes a process for negotiation and consultation for a period of 30 days (or longer if mutually agreed) among senior representatives from the Ministry of Energy, GNPC and the WCTP Block partners to resolve the matter. We and the WCTP Block partners are in discussions with the Ministry of Energy and GNPC to resolve differences on the PoD.”

Kosmos holds interests in the WCTP and Deepwater Tano (DT) blocks, the latter operated by Tullow Oil.

Kosmos operates the WCTP Block under a petroleum agreement which has a duration of 30 years from its effective date (July 2004).  However, in July 2011, at the end of the seven-year exploration phase, parts of the WCTP Block on which the US independent oil company had not declared a discovery, development or production areas, except  where a force majeure (an act of God) had altered the time frame were to be relinquished in compliance with the agreement.

Kosmos reports that it is disputing the relinquishment of the area it planned to drill the Cedrela-1 exploration well.

It would be recalled that Kosmos, in a press release on July 7th 2011, stated that it had delivered a force majeure notice to the government of Ghana and GNPC, following an incident that rendered Transocean Marianas, a semi-submersible drilling rig, which it had contracted to drill a well within its WCTP block, inoperable.

“In July 2011, immediately prior to Kosmos receiving the drilling rig from another operator, damage to the rig incurred during preparations to move the rig to the WCTP Block operations rendered the rig incapable of drilling the Cedrela-1 exploration well prior to the end of the WCTP exploration period on July 21, 2011,” Kosmos reports

Kosmos argues that as a result of this unforeseen delay in the drilling of the Cedrela-1 exploration well, the Company, as Operator for the WCTP PA Block partners, delivered a Notice of Force Majeure.

The Ministry of Energy and GNPC did not agree that this event constituted a Force Majeure situation, with sources saying there was no basis whatsoever to invoke a force majeure as Kosmos was under no obligation to drill the Cedrela-1 exploration well it intended to drill with the Transocean Marianas.

Kosmos reports that “On August 24, 2011, we as Operator of the WCTP Block and on behalf of the WCTP Block partners, delivered a Notice of Dispute to the Ministry of Energy and GNPC as provided under the WCTP PA, which is the initial step in triggering the formal dispute resolution process under the WCTP PA with the Government of Ghana regarding our rights to drill the Cedrela-1 exploration well.

“This Notice of Dispute establishes a process for negotiation and consultation for a period of 30 days (or longer if mutually agreed) among senior representatives from the Ministry of Energy, GNPC and the WCTP Block partners to resolve the matter,” Kosmos reports, adding that the issue continues to be discussed in an effort to reach a mutually agreed upon resolution among the parties, citing risk factors in its first filing with the SEC early last year.

A force majeure, which is also termed an Act of God, is ‘an event which cannot reasonably be anticipated or controlled by parties to a contract and which makes it impossible to fulfil an obligation under the said contract.

Kosmos and its partners’ interest in the Jubilee Field, as well as in existing discoveries within the WCTP and DT remained intact.

The company reports also of its rights, together with the WCTP Block partners to negotiate a new petroleum contract with respect to the WCTP Relinquishment Area, which right they exercised in July 2010 and formally submitted a proposed new petroleum agreement for the WCTP Relinquishment Area in early 2011.

“We and our WCTP Block partners, the Ghana Ministry of Energy and GNPC have agreed such WCTP PA rights extend from July 21, 2011 until such time as either a new petroleum agreement is negotiated and entered into with us or we decline to match a bona fide third party offer GNPC may receive for the WCTP Relinquishment Area,” Kosmos reports.

 

Kosmos, holds an 18% interest in the DT Block, and on February 23, 2012, exercised a right to accept the terms and conditions of the proposed transfer of 4.5% Sabre Oil and Gas Limited (“Sabre”) interest in the DT block, under the DT Joint Operating Agreement, which gives each of the Block partners a right of first refusal regarding the transfer of such interest to a third party, assuming the block partner is willing to match the terms and conditions.

Kosmos says it expects that transaction, which is subject to Government of Ghana consent, to close during the second quarter of 2012, which would increase its interest in the DT Block and Jubilee Unit to 22.05% and 25.82258%, respectively

Under an Unitisation and Unit Operating Agreement (UUOA) signed among the Jubilee Partners on July 13, 2009 with the Ministry of Energy, GNPC and the partners in the two blocks, the discovered fields have been jointly developed to optimize resource recovery.

Tullow Oil became the Unit Operator, with Kosmos Energy as Technical operator.   The Jubilee field is currently producing crude oil at about 70,000 barrels/day and straddles the WCTP and DT blocks.  The field, which was expected to peak at 120,000 barrels per day in 2011, did not meet that production target.

In June 2007, the Mahogany-1 well, which was Kosmos’ first exploration well within the WCTP block, discovered oil in large commercial quantities, followed two months later, in August, by the Hyedua-1 well, just across the block in Tullow Oil’s DT block also striking oil in sizeable quantities.   The two fields were unitized in 2008 for joint development as the Jubilee Field, after successful appraisals.

Jubilee Oil is being produced by the floating production, storage and offloading vessel Kwame Nkrumah MV 21, offshore western Ghana.

Technical Production commenced from the Jubilee Field on November 28, 2010 and the field was officially commissioned for First Oil on December 15 of the same year.

The Jubilee Partners have among them nine discoveries since Jubilee, which are at various stages of development.

Some of the companies currently engaged in exploration, development, or production activities in Ghana include: Afren Plc, Anadarko, Challenger Minerals, Eni, Hess Exploration, Kosmos, Lukoil Overseas, Lushann Eternit, Mitsui Group, Oranto, Stone Energy, Tap Oil, Tullow Oil, Vanco Energy, and Vitol Upstream. [email protected]

Parliament Suffers Credibility Crisis

In the Exercise of Oversight Role

Parliament Suffers

Credibility Crisis


– Top MP Reveals

By J. Ato Kobbie, Managing Editor [The Business Analyst]

The manner, in which the parliament of Ghana has carried out its oversight role, has come under sharp criticism from the Chairman of the Public Accounts Committee, Mr. Albert Kan Dapaah, regretting how the majority, over time, had endorsed in an omnibus manner whatever was presented by the executive.

“While we hail the victory of democracy in our country, Parliament which is the central institution of democracy and the key institution in oversight suffers from crisis of credibility,” Mr. Kan Dapaah, who was speaking on the topic, Parliament’s Role In Ensuring Transparency In The Oil & Gas Sector, stated, calling on the media and civil society to be vigilant in their watchdog roles in holding both government and parliament accountable.

Mr. Dapaah, a Chartered Accountant, who is also Member of Parliament (MP) for Afigya-Sekyere West Constituency, said politicians were more amenable to serious issues raised by the media and civil society organisations than their political opponents and therefore called on editors to recognize this strength in holding public officials accountable to ensure transparency and accountability in the administration of the country’s resources.

“Transparency, Participation and Accountability that come from an empowered citizenry are the strongest antidotes to corruption,” he stressed.

Mr. Dapaah called for a more serious oversight role of Parliament, to end the perennial situation such as where the House is given just a week to read and approve an important document like a Budget statement and the majority would always endorse government budgets.

With reference to many provisions of the Petroleum Revenue Management Act, 2011 Mr. Dapaah highlighted transparency, accountability and public oversight role of Parliament in the management of the country’s oil revenue.

He said even though accountability mechanisms are embedded in the four phases of the Budget Cycle, namely: the preparation phase, approval phase, implementation phase and assurance phase, “the accountability mechanisms are not allowed to work.”

“You can only control expenditure when you know how much you are expected to spend and how much you actually spent,” he lamented, adding that in many instances, there were no accounts for the Auditor-General to audit and therefore it was only transaction audits that took place, a situation which undermined the assurance work of Parliament.

He called for a change in the manner of appointing the Auditor-General, to make that office more independent, recalling  how two previous occupants of that position under two different political regimes left office, stressing; “let us end this cycle.”

The event, which was a retreat for editors on; Strengthening Media Oversight of the Extractive Sectors in Ghana, was organized by Revenue Watch Institute, with Pen Plus Bytes as co-ordinators, and had also presentations from Tullow Ghana Limited, the Ministry of Energy, Ghana National Gas Company (Ghana Gas) and the Oil and Gas Capacity Building Project, which is under the Ministry of Energy.

‘Public Accountability means the obligation of authorities to explain publicly, fully and fairly, before and after the fact, how they are carrying out responsibilities that effect the public in important ways,’ Mr. Dapaah emphasized, quoting Henry McCandless.

On the role given the Public Interest and Accountability Committee (PIAC) Mr. Dapaah wondered whether it would have substantial investigative powers with ability to refer matters to law enforcement agencies as appropriate.

“Will committee members exercise independent judgment and responsibilities?

“Will members be removed only for good cause shown, where good cause is defined as legal cause not political cause, and “In the absence of Right to info Act will Government provide information?”

With a brief background to Ghana’s search for oil, Mr.. Dapaah, who was Minister of Energy from 2001 to 2003, under the New Patriotic Party (NPP) administration, explained to participants why it became necessary to review the fiscal regime in the petroleum agreement, stressing that it became necessary to do so, relying on the legal directorate of the Commonwealth Secretariat, which had contributed to the formulation of the existing fiscal regime.

The TSIKATA Era

Without referring to him by name, Mr. Dapaah stated how Tsatsu Tsikata, as Chief Executive of GNPC, with considerable knowledge in Oil and Gas, “Was convinced that geologically, there had to be crude Oil and Gas somewhere in Ghana” and was “determined to find hydrocarbons using our own resources so that we will own any discovery.”

He touched on Tsikata’s efforts at building GNPC, training a number of Ghanaians, acquiring considerable seismic data and putting in place the legal framework, with reference to the Petroleum Exploration and Production Law 1984 (PNDCL. 84), Petroleum Income Tax Law of 1987 (PNDCL188) and a Model petroleum Agreement.

According to Mr. Dapaah, following extensive Road Shows to sell Ghana’s Hydrocarbon prospects, which attracted some oil companies to come and explore, Tsikata’s opinion that Ghana should find money to explore and thus own the fields when discovered, resulted in diversifying into telecom, gold mining, salt, crude oil imports for Tema Oil Refinery (TOR) and cocoa.  He said he eventually incurred the anger of the Ministry of Finance and Bank of Ghana at the time, which eventually led to his removal from steering the affairs of the national oil company.

THE NEW ERA

Mr. Dapaah said the NPP’s assumption of power in 2001, and change in the management of GNPC, under Dr. Donkor Fodjour and later Sekyere Abankwa of Prudential Bank, with a determined MD, Moses Boateng, led to a new strategy, which involved downsizing and focus on deepwater exploration, followed by a conference held with industry experts at M-Plaza.

He said major observations at the conference included confirmation of Ghana’s good geology but the “Fiscal Regime which sought to obtain NET OIL for Ghana of 65-55% was too harsh to attract investors into a country not known for its oil.”

He disclosed that the COMMONWEALTH SECRETARIAT, then headed by Justice DATE BAH of the ECONOMIC/LEGAL SERVICES SECTION and three other experts, recommended changes in the fiscal regime to 45% to 55%.

According to him, the original terms of the Devon petroleum agreement were reviewed after the M-PLAZA Conference to terms more favourable than Kosmos & Tullow at about the same time that Kosmos and Tullow contracts were signed

KOSMOS – EO GROUP DEAL

He disagreed with suggestions in some circles that the 3.5% stake that Kosmos allocated to the EO Group in the West Cape Three Points (WCTP) block should raise eyebrows, wondering why the Tullow Ghana Limited allocation of 4.5% of its stake in the Deepwater Tano block to Sabre Oil and Gas Holdings Limited never attracted the same concerns.

He argued that what an investor does with its shares after it has conceded to Ghana the negotiated 10% is up to the company,

“Kosmos chose to partner the EO Group and allocated 3.5% out of its shares to them. This is a private arrangement by a Private Investor; Similarly, TULLOW gave 4.5% of its 90% shares to SABRE ENERGY 40% of which is owned by an equally illustrious son of Ghana, Kofi Esson; and

AFREN has ceded 25 of its 70% to Joe Ofori and his Gulf Energy,” he stressed

Mr. Dapaah said the slight differences in the terms are because ALL BLOCKS are not the same, explaining that a particular Fiscal Regime will depend on: “Risk of returns, Geological Challenges, Prospectivity of Block and Availability of Existing Data”

“The terms of Kosmos and Tullow are the same except for additional interest of 2.5%,” adding that that was because “TULLOW Block had been surrendered by DANA PETROLEUM who had left behind 3D Data whereas Kosmos had only 2D Data from GNPC.” E-mail: [email protected]

KOSMOS Energy Ups Stake in Jubilee

The Business Analyst News Desk

US oil independent and Jubilee Technical Operator, Kosmos Energy Ghana HC, has announced that it has exercised its right under the existing Joint Operating Agreement (JOA), to acquire the participating interest of Sabre Oil and Gas Holdings Limited in the Deepwater Tano Block, offshore Ghana.

A release by Kosmos said at a purchase price estimate of approximately $365 million, the price has an additional $45million which is contingent upon the attainment of certain milestones.

The announcement by Kosmos, however comes as no surprise to industry watchers, who have followed with keen interest Sabre Oil & Gas Holdings Limited quest to sell its interest in Ghana’s oil, spread between the Deepwater Tano and West Cape Three Points blocks, over the past year.

Under the JOA, a partner can exercise a pre-emptive right over a partner’s interest in only one block at a time, giving notice to other partners.  What this means is that it is only Tullow Ghana Limited, Ghana National Petroleum Corporation (GNPC) or Anadarko can exercise such a right over Sabre Oil & gas Holdings’ interest in West Cape Three Points.

At the close of the deal, Kosmos’ interest in the Deepwater Tano Block will increase from 18 percent to 22.05 percent, whilst its interest in the Jubilee Field will increase from 24.1 percent to 25.8 percent.

Brian F. Maxted, President and Chief Executive Officer, commenting on the prospects, said “We feel very fortunate to have an opportunity to grow our interest in what we believe are some of the most valuable assets in West Africa at a compelling price.”

Continuing, the Kosmos President said “This transaction adds existing production at Jubilee, enhances our stake in the next oil development offshore Ghana, and increases our exposure to the significant Deepwater Tano exploration program in 2012. We have great belief and confidence in the quality, value, and upside of our discoveries and the further potential of the Tano basin petroleum system.”

Even though Kosmos expects the closing of the transaction to occur in the second quarter of 2012, this would be subject to a definitive transaction agreement, customary closing conditions and necessary government approvals, the release said.

Kosmos says it anticipates funding the purchase price through a combination of cash on hand and borrowings, in the transaction which has January 1, 2012 as the effective date of acquisition.

The Joint Operating Agreement (JOA), covering the Jubilee Field, entered among the partners on 13th July, 2009, with Tullow Oil, Kosmos Energy Ghana, Anadarko, Sabre Oil & Gas Holdings.

Kosmos Energy, an affiliate of Kosmos Energy Ghana, listed on the New York Stock Exchange last year and has given indications of listing on the Ghana Stock Exchange.

The transfer provisions under the JOA ensures that such transactions do not leave in their trail liabilities of exiting parties and requires the consent of all other partners to be effective.

The deal must then finally be consented to by GNPC and the Minister of Energy.

Sabre Oil & Gas Holdings Limited is owned by Irish and Ghanaian partners, and its director, Kofi Esson, signed the JOA as ‘Attorney in fact’. [email protected]

Boost for Cassava Production

By Tommy Ekpe [The Business Analyst]

Four improved varieties of cassava with the potential to increase productivity by 30 to 40 per cent have been released in the country are currently being disseminated to farmers by extension services and International Fund for Agricultural Development (IFAD) funded Roots and Tuber projects.

Seedlings were distributed to farmers in 10 districts for seed multiplication in 2010 and an action plan to scale up dissemination is underway. In addition, two new varieties of cocoyam and 1 variety of sweet potatoes are being processed for released by the end of this year.

This is under the West Africa Agricultural Productivity Programme (WAAPP), whose development objective is to generate and disseminate improved technologies in the participating countries’ top priority areas, as identified by the Conference of African and French leaders of agricultural research institutes (CORAF).

These include roots and tubers in Ghana; rice in Mali; and cereals in Senegal. The region’s consumers, particularly those affected by extreme poverty, are the ultimate beneficiaries of the WAAPP. Agricultural producers and agribusinesses, as users of the improved technology, are the primary beneficiaries of the program. These are also the key participants, along with researchers, extension agencies and universities (in adhering to the agricultural knowledge information system (AKIS) conceptual framework), in the generation and dissemination of technology that is directly supported by the program.

According to the World Bank, a comprehensive strategy for scaling up on-farm demonstration activities and seed multiplication has been implemented by the national extension services in the areas where the root and tuber projects from IFAD RTIMP and CAVA are not operating.

In its Implementation Status Results of World Bank Assisted Regional Projects released last week, the Bank said the construction of the Biotechnology Laboratory is progressing satisfactorily while the Monitoring and Evaluation ( M&E) system has been significantly improved and should lead to a better tracking of results.

“About 75% of the recommendations of the last supervision mission were implemented and the disbursement level was about 60% in September”, the report stated, adding that the supervision mission evaluates that the overall progress towards the achievement of the project development objectives (PDO) is satisfactory and the implementation of the project is also satisfactory.

It however said that efforts towards tracking and documenting results from other national partners involved in scaling-up the dissemination of developed improved technologies and regional networking need to be further strengthened.

Out of the $45 million earmarked for the project, $32.7 million has so far been disbursed.

Describing the overall implementation progress and the progress towards achievement of PDO as satisfactory, the report said the mission confirmed that overall WAAPP-1A is continuing satisfactorily to progress towards achieving its development objectives.

Moves to Give Reliable Power on course

By Tommy Ekpe [The Business Analyst]

Hon. Inusah Fuseini - Deputy Minister of Energy, PowerThe upgrade of the switchyards of Akosombo generation station and Volta substation is 70 per cent complete and is expected to be energized in June this year.

This is in spite of the delays experienced due to the inability of the contractor to work daily since the necessary outages can only take place at weekends.

The project is part of the first phase of the West Africa Power Project (WAPP) whose objective is to increase access of WAPP “Zone A” coastal states (Benin, Cote d’Ivoire, Ghana, Nigeria and Togo) to more stable and reliable electricity as a means to alleviate power supply deficits and/or to reduce their collective vulnerability to drought-induced power supply disruptions.

According to the Implementation Status Results of World Bank Assisted Regional Projects released last week, the procurement process for all project components has been completed and contracts signed.

It said the pace of fund disbursements had accelerated substantially and a further $7m is expected to be disbursed before the end of this Fiscal year, at which point 95% of the available funds are expected to have been used.

The project, whose implementing agency is the Volta River Authority (VRA), is estimated at $40 million out of which $32.8 million has so far been disbursed.

The report described as satisfactory the overall implementation progress, while it considered the progress towards achievement of project development objectives as moderately satisfactory.

Giving an overview of the implementation status, the report stated that besides the initial objective of the project, which is to increase power transfer capability, the energization of the T-line has reduced the need for reactive power in the system and has improved voltage levels and supply to Greater Accra.

“The Aboadze-Volta 330 kV transmission line and substations were completed in late 2009 and have been energized, while data engineering for the SCADA/EMS upgrading component has been completed and equipment installation in the Gridco control centre is ongoing”, it stated, adding that completion is expected in mid-2012.

“The expected outcome of this component is to improve monitoring and control of power exchanges in the WAPP system”, it said.

The report said the expected outcomes of the project include: Increasing cross-border electricity trade between WAPP “Zone A” Coastal States; Reductions in power transfer losses in the principal transmission networks of the WAPP “Zone A” coastal states and more cost efficient coverage of peak power demand through economy power exchanges between WAPP “Zone A” coastal states.

“The WAPP APL 1 project would be considered successful if it provides ample capacity for unconstrained cross-border electricity trade between the five ECOWAS Member States for up to at least 2020”, it indicated.

According to the World Bank, the developmental objective is to be achieved by: (a) implementing a WAPP Cooperation Agreement to facilitate enhanced cross-border power exchanges between the four concerned Transmission System Operators (TSOs), namely CEB, CIE, NEPA and VU; and (b) establishing and fully deploying the cross-border electricity transfer capabilities of the proposed 330kV WAPP Coastal Transmission Backbone.

 

…But 2nd phase delays

The overall progress of the second phase of the West Africa Power Pool (WAPP) project remains moderately unsatisfactory due to the slow pace of implementation, particularly of the Benin components.

An extension of the closing date of both of the IDA Credits looks therefore unavoidable. However, disbursements have accelerated on the Ghana components.

According to the World Bank in its Implementation Status Results of World Bank Assisted Regional Projects released last week, a restructuring will be required to modify the project description to accommodate new components in Ghana and to extend the closing date of the Benin credit.

Touching on the Transmission Infrastructure Development on the Ghana component, the report said the expansion of Asiepke substation is expected to be completed by mid-2012, adding that the rehabilitation of cranes and penstocks at Akosombo are in progress and should be completed by the second quarter of 2012.

“Upgrade of the SCADA system is proceeding well and completion is expected in Q2 of CY12. However, there is about $10m of unallocated funds to be reallocated to new components, following the decision to remove the Accra 3rd BSP from the scope of the project”, it stated.

About the Benin component, the report indicated that progress on the Togo portion of the 330 kV transmission line (not WB-funded) is slow, stating that tendering is unlikely to begin before March 2012.

Completion of works is therefore forecast for mid/late 2014, it said, explaining that since IDA is only financing the supervision of the transmission line, it is tied to the pace of physical works.

“The selection process for the much-delayed engineering supervision consultant will begin in second quarter of 2012 to mesh with the construction timetable”, it stated, adding that the contract for the upgrade of System Control Centers/SCADA, was awarded in October 2011 and signature is imminent.

The goal of WAPP is to establish a well-functioning, cooperative, power pooling mechanism for West Africa, as a means to increase access of the citizens of ECOWAS to stable and reliable electricity at affordable costs.

Meanwhile, the first phase of the Inter-Zonal Transmission Hub Project, which is also part of WAPP, which was approved on June 29, 2011, will become effective on December, 31 2015. Email: [email protected]

WESTERN CHIEFS ENDORSE GAS PROJECT … Amidst Jomoro Youth Protest

By J. Ato kobbie, Managing Editor [The Business Analyst]

The 2012 first General Meeting of the Western Regional House of Chiefs came off last week, with a call on all chiefs and stakeholders in the region, to lend support to the Ghana Gas infrastructure project, for it to facilitate the development of the region.

The meeting, which saw all the Paramount Chiefs of the region, elders and other stakeholders, converge at the Regional House of Chiefs on Thursday, February 23, 2012, was briefed by a high-powered Ghana National Gas Company (Ghana Gas) team, led by its Chief Executive Officer (CEO), Dr. George Sipa-Adjah Yankey, who gave an overview of their activities and the status of the Gas infrastructure project as well as what has necessitated a change in site for the gas processing plant.

At the end of the three-hour long deliberations, the President of the House, Awulae Attibrukusu III, appealed to the Chiefs and Elders of the region, to help educate, especially the youth, to clear misconceptions that they may have about the gas project and also on all the people of the region to lend their support, no matter where it would be sited in the region.

“Initially, we thought they were going to move the whole project from Domunli to Atuabo; God being so good, we invited the Ghana Gas and they have been able to explain that it is only a unit of the project that is being taken from Domunli to Atuabo due to technical and financial considerations,” the president of the House was to tell newsmen.

According to him the project was going to improve the fortune of Nzemaland because the people of the Western region in general have been sidelined for a long time.

“So, if there is relocation and it is only one unit being set up within another area in the same region, then what is the problem,” he quizzed, adding, “So there isn’t anything more for Nananom to say than to give our blessing to the government to go ahead.”

Dissent

Apart from Awulae Annor Adjaye III, Paramount Chief of the Western Nzema Traditional Council, who expressed strong reservations about the change in the  original plan to site the gas project within his area of jurisdiction, the chiefs found it refreshing that it was only the gas processing plant unit that was being relocated to Atuabo in the Ellembele District, whereas plans for a Volta River Authority (VRA) power plant as well as petrochemical industries at the Domunli enclave in the Jomoro District, remained unchanged, contrary to what they were earlier made to believe.

Also dissatisfied with the turn of events was the Member of Parliament for Jomoro, Ms. Samiah Nkrumah, who protested vehemently against relocating the processing plant from the Domunli enclave, which is within her Jomoro Constituency to Atuabo in the Ellembele Constituency.

Meanwhile, as the meeting went on youth from Jomoro, clad in red and black, with red arm bands waved placards, singing and chanting in protest against news of the relocation, and threatening to resist the move.

Project update

The Ghana Gas presentation, which was made by Mr. Victor Sunu-Attah, Director (Project Development) with support from Dr. Yankey and Dr. Ben Asante, Pipeline Consultant to Ghana Gas, gave the chiefs an overview of the company’s mandate and activities, before giving an update on the early phase gas infrastructure project.

The team impressed upon the House that even though final studies were being conducted on the Atuabo site for the location of the gas processing plant, that site appeared to be the best choice within the time frame available for implementing the project, for both economic and technical reasons.

The Ghana Gas CEO dispelled suggestions that the choice of Atuabo was for political expediency, explaining that even though several previous studies had also identified the site as the preferred choice for the gas processing plant, the current decision was based on the recommendation of the Sinopec, which is the company tasked to implement the gas infrastructure, after undertaking a detailed study.

The team revealed that demarcation, geophysical and hydraulogical survey is near completion at the Amansure River area near Atuabo, which is the site earmarked for locating the gas processing plant.

Again, Ghana Gas revealed that specifications for both the offshore and onshore pipelines are completed, while the shallow water pipeline front end engineering and design (FEED) and detailed design studies as well as land pipeline engineering were ongoing.

 

According to Ghana Gas, together with its contractor, SINOPEC, they are in the process of procuring various dimensions of pipeline to be laid to transport natural gas from the Jubilee Field to the gas processing plant and also wheel processed gas to the Aboadze Thermal Plant as well as a new VRA power plant to be installed at the Domunli enclave.

The pipelines being procured are 40-kilometre 12-inch pipeline, which would be laid from the termination point of the deepwater pipeline, previously laid by Technip from the Jubilee Field to shallow water, to the Gas Processing Plant.

Also being procured are 110km of 20-inch pipeline, which would be laid from the Gas Processing Plant, to wheel processed gas to Aboadze; 75km of 20-inch pipeline to be laid from Esiama to Prestea, as well as 20km of 10-inch pipeline which would be laid from the gas processing Plant to Domunli and Nauli.

Rudan Engineering Limited has also completed demarcation and surveying of the 18.9 km2   tract of land, including the buffer zones in the Domunli area, which is earmarked for power generation, fertilizer production, methanol, and petrochemical industries, such as plastics.

“This is an exciting time for the Western region,” Dr. Asante, who has over 23 years experience, working on pipelines told the Chiefs, enumerating the benefits that would come when the project is implemented.

Illustrating the course of the pipeline and advantages of the site options, Dr. Ben Asante said just in capacity of onshore pipelines alone, the Atuabo site would deliver to Aboadze 425mscf of processed gas whereas the Domunli site can deliver 385mscf, due to distance differences.

Dr. Asante said this, coupled with capital expenditure, material and construction costs makes the Atuabo site the preferred choice.

He said not meeting the time schedule for implementing the project would adversely affect the Jubilee Field, in terms of both oil and gas production levels as well as the reservoir itself.

He explained that substituting light crude oil which VRA currently uses to fuel the Aboadze Thermal Plant with processed gas alone would save one million dollars per day.

Giving the Chiefs insight into the technical justifications for the site selection, Mr. Sunu-Attah said the Atuabo site is low-lying plain grassland with virtually no trees, which “makes the clearing exercise during site preparation much easier and less costly, and effectively reducing the project schedule.”

Again, the low laying flat nature of the land at Atuabo requires minimal leveling, even though some filling will be required to raise the site area above the seasonal flood levels.  On the other hand, “the irregular and undulating topographical nature of the Domunli site means that significant cutting and filling will be required with significant adverse impact to project schedule and cost.”

Furthermore, the existing access road at Atuabo presents the project with a significant time saving advantage compared to the construction of new access roads in Domunli site, which has densely grown cash crops and forest.

 

The existence of an 11kv power lines running over the Atuabo site presents a ready, clean and safe source of power to be used during construction, commissioning and operation of the plant, which is not the case with the Domunli site.

 

 

 

 

Land and Resettlement Issues

Ghana Gas submitted further that whereas Atuabo has fewer communities (i.e. three) to be impacted compared to Domunli, which has nine, land acquisition, schedule and costs are expected to be minimal.

“What we are saying is that hitherto, we had time,” Mr. Sunu-Attah emphasized stressing that there were social issues such as resettling people who had lived all their lives on their ancestral lands which were being dealt with.

“But for now, we have fire on our backs,” he appealed.

He said whereas the Domunli area will require the relocation and resettlement of the Bokakole village and its residents, there are no resettlement issues at Atuabo.

Compared to the Domunli site, there will be minimal property enumeration requirements at the Atuabo site, where it is anticipated that compensation requirements, if any, will be very minimal.

The Ghana Gas team conceded that even though there were strong indications that a court action, initiated by some locals in the Domunli area would be withdrawn, that action posed a significant threat to the successful completion of the Ghana Gas Infrastructure Project.

 

Parliament has already approved a subsidiary agreement covering $850million of a $3billion China Development Bank (CDB) loan for the gas infrastructure project.

 

The Western Regional Minister, in a brief remark to the House, appealed to the chiefs and people of the region to desist from playing politics with this all-important project for the region to become the ultimate beneficiary.  Also present at the event was the Sekondi Municipal Chief Executive as well as some opinion leaders. [email protected]

A print version of this article is published in The Business Analyst, Wednesday, February 29th – Tuesday, March 6th, 2012.

 

GHANA GAS, WESTERN CHIEFS IN CRUCIAL MEETING …Over Gas Project

GHANA GAS, WESTERN

CHIEFS IN CRUCIAL MEETING

…Over Gas Project Location

…As Buah Fends off Conspiracy Theories

‘How Can I Buy My Own Fathers’ Land,’ he quizzes

 

AWULAE ATTIBRUKUSU III, president, Western Regional Hse of Chiefs
AWULAE ATTIBRUKUSU III, president, Western Regional Hse of Chiefs

By J. Ato Kobbie, Managing Editor [The Business Analyst]

The Western Regional House of Chiefs, will on Thursday play host to a high-powered Ghana National Gas Company (Ghana Gas) team, which would be giving a full briefing to the House on its activities towards implementing the country’s gas infrastructure project, in the region.

The meeting comes on the heels of recent accusations by the chiefs and people of the Western Nzema Traditional Council (WNTC), at a press conference addressed by the paramount chief of the area, Awulae Annor Adjaye III, who attacked two public servants from the region, Hon. Emmanuel Armah-Kofi Buah, Deputy Minister of Energy (Petroleum) and Dr. George Sipa-Adjah Yankey, the Chief Executive Officer (CEO) of Ghana Gas.

The WNTC, among other things, accused the two of masterminding recent suggestions that the site for the country’s maiden gas infrastructure, which is to process gas from the Jubilee Field for power generation and other uses, is relocated from the Domunli enclave in the Jomoro District to Atuabo in the Ellembelle District.

Recalling earlier assurances given the people of the area by the Ghana National Petroleum Corporation (GNPC), which led to the release of 18.9kilometres of land, Awulae Annor Adjaye III, expressed surprise at suggestions that the Atuabo area was more suitable, saying the place being a perennially flooded area, would cost the nation more to fill.

Even though there have been some opposition by some of the people in the Domunli enclave, evidenced by a court action, seeking to prohibit further progress of work until compensation was paid, the signal that the area risked losing the project to neighbouring Atuabo has brought home the reality of the potential loss facing them.

Apart from the chiefs, a youth group in the Jomoro area, has also been protesting against the relocation of the project to Atuabo, and has petitioned the Western Nzema Traditional Council, officials of GNPC, Hon. Samia Nkrumah, who is MP for Jomoro, the DCE and chiefs and elders of the area.

The WNTC had further alleged that Hon. Buah and Dr. Yankey were motivated by personal considerations other than technical and economic reasons, accusing the former of attempting to buy 100 acres of land from Nana Kabina Tindenle, Chief of Kabina Suazo, a suburb of Half Assini in the Jomoro District, under the paramountcy, for sale to Chinese investors.

Fight Back

Meanwhile, Hon. Buah, who is also the Member of Parliament (MP) for Ellembelle Constituency, has vehemently denied any involvement in a land sale or an attempted land sale to any Chinese company.

Speaking to The Business Analyst on Tuesday, following a republication of the allegations on the internet by a group, which describes itself as Mediawatch Research Associates, Hon.  Buah wondered, “How can I buy my own fathers’ land?”

He described the accusations as false and only meant to damage his reputation by people who are assuming wrongly that he had the power to cause the change of a project site in the region.  [See full rejoinder statement below].

Hon. Buah said the Ministry of Energy and Government were awaiting recommendations of Ghana Gas, to guide in taking a decision on the matter, assuring however, that no matter where the project would be sited, it would be the basis for a lot of industries springing up in the region, to create more jobs for the people.

He assured of government’s commitment to facilitating the development of the area, calling on the wider Nzema area not to allow the disagreement to stall the development of their area.

Meanwhile, Dr. Yankey, who also hails from the Nzema area, has maintained that the project site could be changed only based mainly on technical and engineering reasons and not on political or emotional reasons.

In a recent interview with The Business Analyst, Dr. Yankey, indicated that Ghana Gas was awaiting the results of geodetical and geophysical studies that it had commissioned, before making recommendations to the Minister of Energy and government for a decision.

Sinopec, under the agreement under a Project Implementation Agreement with Ghana Gas, is pre-financing the ongoing work, to be re-imbursed from a US$3billion China Development Bank (CDB) loan.

In reviewing site options available for the project, the Sinopec identified the Atuabo site as the most suitable, confirming an earlier study undertaken in 2008. [See Ghana Gas Steers Off Litigation in The Business Analyst, Wednesday, February 8th – Tuesday, February 14th 2012.]

Meanwhile, the paper has gathered also that the people of Shama are eagerly yearning on the flanks, ready to offer land for the project, if the rivalry between the Jomoro and Ellembelle area over the gas project site continued.

It is envisaged that the regional house of chiefs, some of whose members had stormed parliament during the debate for the approval of the CDB loan, would prevail on their members to exercise the utmost restraint in order to maintain the peace of the area to facilitate development.

The full statement of the rejoinder by Hon. Emmanuel Armah-Kofi Buah, is reproduced below:

 

RE: MINISTERS SELLING STATE LANDS TO CHINESE COMPANIES MUST RESIGN

My attention has been drawn to a story with the above headline posted on Ghanaweb, February 21, 2012 by a group describing itself as Mediawatch Research Associates, which alleges among other things that I, Emmanuel Kofi Buah, Deputy Minister for Energy and MP for Ellembele and another Minister, Alhaji Collins Dauda have sold 100 acres of government lands in the Brong Ahafo  and Western Region to a Chinese company-HuangDong Construction and Mining Company- and in the process received payments of over 300,000 dollars.

The story further alleges that I have been made a Non-Executive Director by the said company on a monthly payment of 10,000 dollars.

I wish to state categorically that there is no iota of truth in the story that is maliciously calculated to destroy my image and hard-won reputation as the elected representative of the Ellembele Constituency and Deputy Minister of State.

For the records and for the avoidance of any doubt, let me state categorically that I have never facilitated the sale nor sold government lands in the Evalue-Gwira Constituency or any part of the country to any Chinese company.

For this reason, I have never received the said payment as alleged in the story and do not serve as Non-Executive Director of any Chinese Company.

My oath of office and my personal philosophy would not permit me to do as such.

I challenge the so-called Mediawatch Research Associates to do the ethical thing by providing that hard evidence that will prove beyond any doubt that I have indeed facilitated the sale or sold any government land to a Chinese Company.

It must never be enough for individuals or organisations to publish allegations of such nature without evidence or proof on the Ghanaweb, which has global viewership. It is also sad to note that such publications can be allowed on Ghanaweb, when the authenticity, physical location of the group, and contact information of groups publishing the story are unknown.

I will urge Mediawatch Research Associates, in the national interest to present their evidence of my supposed involvement in the said activity to the security agencies or do the right thing by retracting the story and apologise.

I reserve the right to pursue justice to clear my name.

Signed

Emmanuel Armah-Kofi Buah

MP, Ellembelle Constituency

Deputy Minister of Energy

[The print version of this story is published in The Business Analyst of Wednesday, February 22nd – Tuesday, February 28th, 2012]