Set up regulatory body for upstream oil — Awal

11/10/2010

Story: Musah Yahaya Jafaru
THE Managing Director of Graphic Communications Group Limited (GCGL), Mr Ibrahim Awal, has proposed the establishment of a new petroleum regulatory authority to manage the administrative and regulatory requirements of the country’s oil industry.
He said the role of the Ghana National Petroleum Authority (GNPC), as a regulator and participant, “only creates doubts about the competitive spirits that should govern the oil sector”.
Mr Awal was delivering a paper on: “Managing Ghana’s reputation in an emerging oil and gas industry”, read on his behalf by Mr Albert Sam, the Public Affairs Manager of GCGL, at the Institute of Public Relations, Ghana (IPR) dinner dance in Accra at the weekend.
The paper drew lessons from the experiences of other African, European and Latin American oil-producing countries, including Nigeria, Angola, Libya, Norway and Venezuela and urged Ghana to take a cue to make oil a blessing rather a curse to the people.
Mr Awal noted that Ghana’s position on global competitiveness went down, according to the World Bank’s latest report, which was a disincentive to investments.
He said since the oil sector was new, “the country would do well to remove the administrative bottlenecks and political interference which slow down business operations and its interaction with global economies”.
Mr Awal stressed the need for the country to look at its royalty policy and fiscal regime, especially on contentious issues such as signature bonuses and state participation.
According to him, signature bonuses and royalties have not helped in countries that have used them in the area of investment.
State participation has also proven to be counterproductive such as in Nigeria, where substantial resources of public funds are invested to keep pace with the complexities of the industry at the expense of social infrastructural development.
Mr Awal asked the nation to approach some of the major international oil companies and market some of the oil prospects to them, since they bring in financial resources and new technology.
He, however, noted that most of the major international companies were not socially responsible, and where they had operated, there had been major environmental concerns and conflicts which pointed to oil as a curse.
He, therefore, called for the review of the environmental laws, “to hold these companies accountable if they accept to invest in the sector”.
Mr Awal cautioned that over-reliance on the oil sector might bring in revenues that would further reduce the competitiveness of the country, since such inflows would likely lead to currency appreciation.