CSOs should take interest in Oil Regulatory Framework

By Ebenezer Hanson
Ghana is on the threshold of increasing its national kitty by about 50% from 2011 if the oil begins to flow from the Jubilee Fields in the Jomoro District of the Western Region, according to a World Bank Report last year. But the question is, how much of this revenue will become beneficial to ordinary Ghanaians?
Mr. Emmanuel Kuyole, the African Regional Co-ordinator of Revenue Watch Institute, believes that the posture of Civil Society Organizations (CSOs) relative to the oil regulatory framework will impact greatly on the extent to which the welfare of citizens will be maximized from oil revenue.
He has thus urged CSOs to take keen interest in the oil regulatory framework, particularly the fiscal aspects, currently being discussed by the relevant institutions before it takes its final shape and become law.
“Some of the agreements are currently being reviewed and we don’t what will happen to them. But it will be expedient for civil society to take keen and active interest in what is going on and to make the relevant input where necessary to ensure the revenue inure to the benefit of the ordinary Ghanaian,” he told participants of a two-day workshop on the use of royalties in mining and oil communities in Takoradi at the weekend. He was speaking on Civil Society Engagement on Ghana’s Extractive Industry Transparency. The workshop was organized by the Coalition on Decentralization which comprises Public Agenda, Friends of the Nation and Resource Link.

Citing excerpts of a Ministry of Finance and Economic Planning’s Report on Ghana Extractive Industries Transparency Initiative (GEITI) for July –December 2004, Mr. Kuyole identified lack of independent check on the fineness and purity of gold, lack of guidelines for establishing the prices of minerals won, challenges in royalty computation and the low payment at minimum 3% threshold, among others, as some the problems which have to be fixed if Ghanaians and mining communities in particular are to benefit.
“The amounts payable are not significant and even if they are paid regularly, they will not have any significant impact on development outcomes,” the reported noted. The stipulated amount was a meager 50pesewas(c 5000.00) per square kilometer.
The EITI is a global minimum standard for revenue disclosure- it combines transparency (EITI reports) and accountability (Multi-stakeholder group).
The initiative is robust yet flexible. It allows participating countries to shape their own process according to needs- These needs varies from: total disaggregation of revenue information, expansive materiality, sectors beyond oil, gas and mining, transparency of expenditures. Establish in 2003, there are 26 candidate countries globally.
Mr. Kuyole identified lack of transparency, problems of accountability, lack of capacity, among others, as some of the difficulties in the mining sector and which have to be forestalled in the oil industry.
To ensure maximum revenue for government, Mr. Kuyole challenged government to build the capacity of the Internal Revenue Service (IRS) to equip it to assess the exact operation cost of the mining companies since it constitutes a major determinant for calculating the revenue of the company.
During discussions, many participants agreed with Mr. Kuyole’s call for the need to build the capacity of IRS to enable them to correctly assess the total revenue of mining companies.