Ghana to get more from oil revenue

Page 34 (lead) Feb 27/2008

Story: Charles Benoni Okine

Ghana will obtain far more than half of the profits to be generated from any oil and gas produced in any concession in the country, Mr Moses Boateng, the Managing Director of the Ghana National Petroleum Corporation (GNPC), has indicated.
It is, therefore, not correct to suggest that Ghana will be entitled to only 10 per cent of the profits, while the foreign companies take the rest.
In an interview with the Daily Graphic on concerns raised by a section of the Ghanaian public that the country would benefit from only 10 per cent of the total profits when the full production of oil and gas began in earnest, Mr Boateng said many other commitments, as mentioned on the part of the companies drilling the oil, would boost what the country was entitled to.
He explained that royalties, carried and paying interests, income tax and additional oil entitlements to be paid by the oil companies were all sources from which the government would benefit from the oil and gas production and asked Ghanaians to disabuse their minds of the fact that the country was only entitled to a mere 10 per cent of the profits.
He also noted that unlike the foreign companies, Ghana’s money would be risk free.
Mr Boateng made the clarification shortly after he had made a presentation at the ongoing National Forum on Oil and Gas Development called at the instance of the government to find ways of deriving maximum benefits from the oil find in the country and also ensuring that the discovery was a blessing and not a curse.
He said the mathematics of the benefits that would accrue to Ghana was based on laid down laws in the industry and Ghanaians had nothing to worry about.
“The country will not lose from this business because the laid down procedures and laws are in place and we will go by them to ensure that Ghana benefits fully from the find,” he said.
On concerns that although Ghana was endowed with lots of gold, only an insignificant percentage of the proceeds came to the state, a fate that the country’s oil find would suffer, Mr Boateng gave the assurance that what was due the state would be collected appropriately.
During his presentation, he said there was the need for an upward review of the taxes and royalties to be paid by the oil drilling companies.
“In the past, when Ghana was declared a high risk area in terms of oil exploration, the taxes and royalties were low, but now that we have found the oil here, it is no more so and we need to charge more,” he added.
Mr Boateng said the GNPC was also considering increasing its take by negotiating upwards the percentages of paying interests to about 10 per cent, in addition to the royalty and carried interest.
On the future of exploration and production of oil in the country, he said the GNPC was targeting about $10 billion in upstream foreign direct investment by 2012 but noted that “this can be achieved only through aggressive promotion of the hydrocarbon potential and the opportunities generated as a result of the recent oil discoveries”.
Mr Boateng said the human resource of every company was key to the realisation of its corporate objectives and so the corporation intended to aggressively recruit and train its staff to meet the enormous challenges in the oil industry in view of the recent discoveries.
He said the GNPC had also adopted what he described as the ‘zero flaring of gas’ so that the gas produced would have to be injected into the reservoir until the country had put in place the necessary infrastructure to utilise it.
The Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, who chaired one of the panel discussions, said the government was taking note of the various concerns, suggestions and inputs being made at the forum and pledged that all efforts would be made to ensure that care was taken to fully utilise the benefits of the find to the satisfaction of all Ghanaians.
He said the government called the forum because it wanted to share ideas from a broad spectrum of society, countries that had benefited positively and those which had also benefited negatively from oil discoveries so that any move by the government would be based on informed position.
The Governor of the Bank of Ghana, Dr Paul Acquah, said financial proceeds from oil could easily derail the macro-economic stability of the country.
He indicated that the bank was resolved to ensure that in the face of many in terms of money from the find, the macro-economic environment was adequately protected against any shocks.