The Institute of Economic Affairs (IEA) has urged the government to immediately review oil contracts it negotiated with multinational extractive firms, since the current contracts are very unfavorable to the country.
Such review, it said, had become urgent with the passage of the Petroleum Exploration and Production Law in 2016 to allow open bidding and regulation of oil contracts in the country.
“The oil contracts the government negotiated have not been favourable because we rushed to produce oil and we did not get the governance framework in place before starting production,” it stated.
It brought together the academia, diplomats and representatives of think tanks to discuss how best Ghana could reap maximum gains from its oil industry.
Prof. Asafu-Adjaye said oil production in Ghana started in December 2010 but the Petroleum Management Act came out in 2011, while other key bills required for the industry were not even thought about.
“Overall, Ghana has not maximized the benefit it could derive from oil because we rushed into producing oil without putting in place proper legislation,” the IEA senior fellow added.
According to him, the oil extraction has generated additional $3.2 billion revenue for the government to spend on development projects though “there is little to show for it”.
Prof. Asafu-Adjaye noted that oil had added very little to economic growth, and by extension, employment and poverty alleviation in the country, a situation he blamed on the exporting of oil offshore Ghana.
The senior research fellow indicated that in 2015, petroleum contributed GH¢2.076 billion to the country’s gross domestic product (GDP), in comparison with other sectors, including mining, GH¢2.77 billion; manufacturing, GH¢2.39 billion; agriculture, GH¢7.54 billion and services, GH¢17.553 billion.
Prof. Asafu-Adjaye said for the country to reap maximum gains from its oil industry, the government should, as a matter of urgency, make the necessary investments required to facilitate offshore processing of oil and gas.
Story: Adnan Adams Mohammed