AN OPEN CHALLENGE TO IEA
On Tuesday 5th December, 2017, the Institute of Economic Affairs (IEA) organized a round table conference under the theme, “A Decade After Oil Discovery in Ghana: The Economic Impacts and Policy Implications.” The call upon Government at the end of the conference by Prof. John Asafu-Adjaye of the IEA to take steps to “review Oil Contracts with extractive firms” was in the right direction.
However, to say: “We rushed to produce oil and we did not get the governance framework in place before starting production,” and to blame the abysmal situation we found ourselves, in terms of petroleum revenue currently accruing to Ghana on PNDC Law 84 is completely untrue and false.
There was a proper governance framework backed by PNDC Laws 64 and 84 which support the world standard norm, the Production Sharing Agreement (PSA) fiscal regime which all African countries newly into oil exploration are adopting.
The fact that previous NPP/NDC Administrations decided to ignore this existing legal framework and signed contracts based on Royalty tax/ Hybrid Systems not backed by the laws in our legal books, account for the grave and abysmal situation we found ourselves in as a nation. If we had consolidated the PSA which the PNDC Laws 64 & 84 support, the situation would have been far different, as shown in the analysis below.
Art. 919 of 2016 was hurriedly passed to legitimize the Royalty Tax/Hybrid System contracts which are responsible for the less than 20% of total production revenue accruing to Ghanaians, the Sovereign owners of the oil and gas resources.
“The new Law is...garbage,” declared Dr. Raymond A. Atuguba, at the “Ghana Oil Conference” held January 11th -13th 2017 at Labadi Beach Hotel, in Accra. That sums it up aptly!
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