In 2010 Ghana expects to turn on the taps to its new-found offshore oil wealth, and the country’s lawmakers are now thinking hard about how new oil revenues will be used. Concerns among civil society groups and members of Parliament are rising, as little progress was made in 2009 to develop regulations and safeguards to promote transparency and good management of the country’s new oil wealth. None of the long-expected bills on regulating the petroleum sector and managing revenues have been presented by the government to Parliament, or to the public for consultation.
The media in Ghana are reporting that representatives of all the main political parties in Parliament are sufficiently concerned about the anticipated $1 billion in additional revenue in 2010 that they issued a communiqué calling for the government to stop issuing any new licenses for oil production until it can improve its regulations for the oil industry and clarify how the money will be managed.
An article in the government-owned Daily Graphic newspaper said that the members of Parliament “argued that less than one year before the drilling of the country’s oil in commercial quantities, there was not a single law before Parliament on how the country would manage the oil fields and the expected revenue as well as how to ensure that the environment was not damaged by the companies.”
The communiqué urged the government to use oil money to diversify its economy, and avoid an over reliance on oil that has been so disastrous in other countries in Africa. The communiqué also pointed out that Ghana needs to beef up its tax revenue agency to ensure oil taxes are properly collected and available for social programs to benefits its citizens. The members of Parliament called for the government to use 80 percent of oil funds to improve the “physical and social infrastructure” of the country, save 10 percent for future needs, and use the other 10 percent for stabilizing the budget.
In early 2009 Oxfam America and the Integrated Social Development Center of Ghana (ISODEC) issued a report called Ghana’s Big Test that recommended the country halt new licenses and disclose details of licenses and agreements it makes with oil companies as a means to increase transparency. Following the release of this report, Ghana’s new president John Atta Mills committed to do this, and also said the country would take steps to promote new and better regulations and foster open and public procedures for issuing licenses and setting policies.
To date, the government has not followed through on its commitments to disclose petroleum agreements, despite continued calls from civil society and parliamentarians to do so. Oxfam partner organization ISODEC has continued to promote opportunities to implement recommendations from the report. Steve Manteaw, campaigns coordinator at ISODEC, says that, “Ghana must control the pace of petroleum sector development so that it does not outstrip the capacity of the government and society to build institutions, regulations and standards.”
“The communiqué issued by the members of Parliament, cutting across Ghana’s political spectrum, emphasizes the importance of transparency and responsible management of oil revenues,” says Ian Gary, Oxfam America’s senior policy advisor and author of the Ghana’s Big Test report. “It will be vital for the government to fully consult with members of Parliament and the public at large on the legal framework for regulating the sector and managing revenues so that strong safeguards are in place before oil starts to flow.”