Govt to develop master plan for petroleum sector

Spread (lead) August 21/2008

Story: Charles Benoni Okine

THE government has constituted a team of experts to develop a master plan for the petroleum sector in the wake of the oil find in the country.
The team has been subdivided into six technical groups and each is expected to produce a policy document, which will become part of the master plan to guide the development and management of the industry and how it interfaces with the rest of the economy.
They sub-groups are the Legal regime, fiscal regime and fund types, health safety, environment and community issues, security, local content and capacity building and the downstream, natural gas utilisation and infrastructure development.
The Chief Director of the Ministry of Finance and Economic Planning, Nana J.B. Siriboe, made this known when he opened a day’s consultative meeting on the oil and gas fiscal regime and fund types in Accra yesterday.
The meeting was to provide space for in-depth discussions on the specific issue of taxation and all the fiscal arrangements most suitable for Ghana in its quest to achieve the desired growth into a middle income country.
Last year, the Kosmos Energy, one of the world’s reputable oil companies working in the country, hit oil in commercial quantities, a discovery that threw the entire country into a frenzy, with many expecting the find to end the economic woes of the people.
The find in the West Cape Three Points of the Western Region is said to be the largest discovery in deep water West Africa and potentially the largest single field discovery in the region.
Nana Siriboe said: “The eventual benefits that Ghana can receive from its oil and gas resources depend, in part, on the fiscal regime that is in place”.
He said many experts were of the view that the fiscal regime was what separated those economies where petroleum had made a difference to the overall living standards of the citizens.
The fiscal regime refers to the laws, regulations and guidelines that define the revenue obligations of the producing companies, the measurement of revenue and costs, the various instruments of taxation and charges, the sharing of benefits, the guidelines for reporting, which are often coded in agreements and in the laws of the land.
The fund types deals with how the government uses its share of revenue to support current budget, to build assets to ensure inter-generational equity and to provide a cushion for stabilisation.
“Since February 2008, we have had the benefits of many experts on several aspects of the petroleum industry,” Nana Siriboe said.
He said the challenge for the country was not so much to do with reinventing how to govern the industry but “our challenge rather is how to take these lessons and experiences and use them to develop the rules and guidelines that will do two things for us”.
First, he said, was how the benefits of the find would yield the maximum direct and indirect benefits for all Ghanaians and secondly how to make progress towards a good and prosperous society.
Nana Siriboe stressed the need for the teams to balance the need for government revenue versus the incentives to attract continuing investments into the industry, balance the current development and budgetary needs versus savings and investment for the future, and balance the needs of the petroleum industry vis-à-vis the growth and sustainability of the non-oil sector of the economy.