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Ghana oil revenues to gush without spending plan
With oil set to flow in a matter of months, critics are worried that Ghana has failed to come up with a detailed national strategy for spending an estimated $1 billion a year in revenues from a vast, newly discovered oil field or a framework to manage the money and regulate the country’s fledgling petroleum industry.
More than 250 representatives from environmental, human rights, watchdog and community-based organizations participated in a summit last month in Accra, Ghana, and strongly urged the government not to spend any of its newfound oil revenues until it has created a “long-term development plan.” Participants at the Citizens’ Summit on Oil and Gas sought to make sure that the oil revenues benefit the local people, 80 percent of whom live on less than $2 a day.
“The absence of a long-term national development strategy with broad consensus on spending priorities may encourage wrong investment decisions, wastefulness and mismanagement of petroleum revenues with serious negative implications for the economy,” according to a statement adopted by the summit’s attendees and made public last week.
“The country lacks a detailed development plan,” he said. “How do they want to transform oil revenues into human and physical capital?”
The 2007 discovery of a vast reservoir of oil in the deep waters off Ghana’s coast by a small U.S.-based oil-exploration company named Kosmos Energy has promised to turn the poverty-stricken country into an oil-rich nation almost overnight.
The find, now known as the Jubilee Field, was one of the biggest in West Africa in years. Now Ghana and Kosmos are fighting over who ultimately will control the field - where up to 1.8 billion barrels’ worth of oil are said to be contained and where more might be discovered.
The dispute, which The Washington Timesreported in March, has threatened to damage the warm relationship between the United States and Ghana. The Obama and George W. Bush administrations have praised the African nation’s successful transition to democracy.
Many fear that Ghana could fall victim to the “resource curse,” a phenomenon of bad governance and increased poverty in some countries where a wealth of natural resources has been found.
Mohammed Amin Adam, national oil coordinator for a coalition of watchdog groups called Publish What You Pay-Ghana and one of the organizers of the summit, said the Ghanaian government needs to be prepared by creating laws, regulations and institutions that can manage the billions of dollars in new revenue coming into the country.
“In my view, the government will not be ready,” he said. “First oil is expected in November 2010, and yet the legislations and the structures needed for the industry are not ready.”
He said the government should have implemented “a new comprehensive petroleum regulatory law. But because we are late, they are only amending certain sections of existing legislations,” which he said are obsolete.
Participants at the summit called for the government to publicly release amendments on petroleum regulation. They also sought a moratorium on licenses to search for and develop additional oil fields and on production until Parliament enacts laws to regulate the industry. They said in their public statement that the delay in passing the legislation is “dangerous before the first flow of oil.”
Such concerns about Ghana’s readiness are long-standing.
Ian Gary, senior policy adviser for extractive industries at the international relief group Oxfam America, wrote in early 2009 that challenges posed by Ghana’s oil boom are “broad, deep and complex and should not be underestimated.”
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By Donald Lambro
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