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Energy Minister has ‘too much powers’ in oil contracts – PIAC Chair

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The powers of the Energy Minister in assigning oil contracts must be whittled down in order to curb the systemic corruption associated with oil contracts, Dr Steve Manteaw, Chairman of the Public Interest and Accountability Committee (PIAC) has said.

According to him, the discretion assigned the energy minister in determining the royalty rate for contracts poses corruption risks, hence the need to review the law.

Speaking at a public forum organised by the Caucus for Democratic Governance, Ghana (CDG-GH) on the theme: “On the $30 billion state capture in Ghana’s oil industry” last week, Dr Manteaw said:, “to address the problem at the base will require legislative reform”.

“We will need to, as a national collective, push for a review of the sweeping discretion given one person to take major decisions on behalf of the state, in the oil and gas industry. This is important because of the nature of our political settlement, where Parliament’s potency to check the abuse of discretionary power is weakened by the hybrid system of the democratic governance we practice.”

“For instance, a review of the E&P Act, 2016, Act 919, reveals what appears to be an inconsistency in the law, which, in itself, poses a serious corruption risk.”

Whereas open tendering is the default option of the law, Section 10(9) assigns the minister responsible for petroleum a discretion to ignore the outcome of a bidding round, and to enter into direct negotiations with a company of his or her choice, where, in his or her estimation, such will generate an efficient and optimal benefit for Ghana.”

“It is my considered view, that the assignment of such discretion without adequate safeguards exposes the Minister to all manner of influences, bribery, and other forms of illicit gain.”

“The discretion assigned the minister in determining the royalty rate for contracts signed with partners also poses substantial risk of corruption.”

Dr Manteaw expressed worry that Ghana does very poorly with its oil contract negotiations with both local and foreign companies.

Apart from the inability to negotiate well, those contracts, Dr Manteaw said, are also characterised with bribery, cronyism and other forms of corrupt practices.

He said: “Let me make the point that those who negotiate deals for us in the name of the Republic recognise that as citizens, they owe us an explanation for what they do with the power we have vested in them”.

“I have not been happy with how they have negotiated oil contracts in this country, right from day one, from the EO Group. Let us remember that at the time the EO Group was assigned its 3.5%, the company did not exist and we call it sweat equity.”

He added: “We need to have strict rules on how we treat local participation in the sector, otherwise you will have cronyism in ways that short change the country”.

“Then we have another situation where a certain Joe Ofori was caught up in the Afren contract. Later on, there was an attempt to wriggle the 2% stake from Joe Ofori for allegedly being suspected to belong to a certain political party” Dr Manteaw added.

He said: “A study undertaken by the Civil Society Platform on oil and gas with support from Star Ghana identified contracting as a major risk in the extractive industry value chain, political capture, rent-seeking usually facilitated by opacity, bribery, cronyism are all forms of corruption associated with contracting and we need to have strict rules to prevent these from happening.”

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