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THE NEW SNAKE OIL? The violence, threats, and false promises driving rapid palm oil expansion in Liberia.


Global Witness

July 23, 2015

Urgent reforms needed to protect citizens and regulate plantation companies.

As Liberia emerges as a new frontier market for the cheapest, most popular vegetable oil globally, Liberians report being beaten, threatened, and arrested for taking a stand against one of the world’s biggest palm oil plantations in the southeast of the country.

State officials are said to be helping the palm oil company Golden Veroleum (GVL) harass communities into signing away their land and crush dissent. Global Witness reveals how GVL accelerated its operations at the peak of Liberia’s 2014 Ebola outbreak, holding meetings with hundreds of people and encouraging illiterate citizens to sign away their land rights when community support groups were staying home for risk of contagion. At this time GVL almost doubled the size of its plantation.

This behaviour hasn’t discouraged the world’s major banks from offering their services. Standard Chartered, HSBC, and Citibank alone hold shares in GVL’s parent company – Golden Agri-Resources (GAR) – worth nearly US$ 1.5 billion.

The case of GVL risks becoming the first chapter of a longer narrative of dispossession and abuse. Liberian President Ellen Johnson-Sirleaf has made agriculture a central pillar of the country’s development strategy, making repeated – yet so far unfulfilled – public assurances that palm oil will lift poverty in rural areas. In response to early protests at GVL’s plantation she called those who spoke out against the company “unpatriotic” as they risked discouraging future investors.

Hear from communities about signing deals with GVL, called Memorandums of Understanding (MoUs).

GVL has bought the rights to convert 2,600 km2 of southeast Liberia into an oil palm estate – an area the size of London and Barcelona combined. Its contract is valid for up to 98 years, affecting some 41,000 people.

Public meetings where landowners were encouraged to hand over their land to GVL were watched over by powerful local officials, and in at least one case armed police. Global Witness also documents several accounts of violent assaults and arbitrary arrests of those who voiced their concerns.

The benefits offered by GVL to communities in return have been negligible. Those willing to work for the company are promised access to free medical support and schools. For non-employees, the most tangible negotiated benefits Global Witness could find evidence of were six toilets.

The violence and intimidation documented in Liberia parallels a disturbing global trend of increased attacks on human rights activists who protect the environment and defend their land. Activists are being killed in record numbers, threatened and criminalised for standing in the way of so-called ‘development’. 

Ten percent of Liberia is now earmarked for agricultural plantations – an area three times the size Beijing. This rapid expansion is taking place in a legal vacuum. There are no laws in Liberia to govern how agriculture companies should be awarded contracts, how they should operate, or how they will be held to account.

Global Witness is calling on Liberia’s government to investigate acts of violence, pass a law recognising that rural communities own their land, and regulate the country’s agriculture sector to bring an end to the impunity enjoyed by plantation companies.

Watch the rate of GVL expansion in Liberia from 2011 – 2015 here.  

GVL and GAR have denied wrongdoing. GVL stated that it has played no part in the intimidation of community members in its plantation area and that its operations between August and October 2014 – when the Ebola outbreak was at its peak – were part of its long-term plan. GAR has acknowledged that its operations have experienced “challenges” but that it is working to improve its procedures. Representatives of HSBC and Citibank stated that its shares in GAR are held “in custody” for other ultimate (beneficial) shareholders.

Read full responses from GVL here and here, from GAR here. Communication from one of GAR’s investors Kopernick Global Investors, can be found here.

Read The New Snake Oil report here

Download the press release here 

FIND OUT MORE

Alice Harrison, Communications Adviser

aharrison@globalwitness.org

+44(0)7841 338792

Tanzania: ENOC Africa Wins Another Tender to Import Fuel


Tanzania Daily News via AllAfrica 

A TANZANIAN oil company, ENOC Africa, has won a tender to import fuel under the Petroleum Bulk Procurement System (BPS) for the month of October, this year.

The tender that attracted six oil companies including five foreign and international companies, was awarded to ENOC Africa after offering the lowest Weighted Average Premium per Metric Ton of 45.771 US dollars per MT.

Other companies (all international) that participated in the tender include Addax Energy SA which quoted 49.18 US dollars per MT, Augusta Energy SA (48.854 US dollars per MT) and Gapco (K) Ltd (47.543 US dollars per MT).

Speaking about the tender results at the weekend of which the company will import 299,872 Metric Tons of fuel, Petroleum Importation Coordinator (PIC) General Manager, Michael Mjinja, said ENOC Africa was pronounced the winner after meeting all the tender requirements and proving that its offer would benefit the country, traders and consumers.

“Among the six oil companies, only four returned the tender documents and finally the winner (ENOC Africa) was picked. ENOC Africa is the only locally registered company and the consignment it will import will be enough to serve the country for a period of one month and two weeks,” he said.

Mr Mjinja said it was delighting to see local companies like ENOC Africa coming up to pose a challenge to giant foreign international oil companies which had previously dominated the sector by frequently winning such tenders.

“BPS is the most transparent way of public procurement where the winning bidder is decided in the open before representatives of all bidders, everyone endorses the winning bidder,” said Mr. Mjinja.

 
 

ENOC Africa will import 156,863 MT of Automotive Gas & Oils (AGO), 115,490MT of Premium Motor Spirit (PMS – gasoline), 26,269MT of Jet A1 and 1,250MT of Kerosene.

“With the transparent manner in which the winning bidder is picked, oil marketing companies are satisfied with the process. They do accept decisions made openly and unanimously in picking the winning bidder,” said Mr Minja.

When contacted via phone on Monday, the Energy and Water Utilities Regulatory Authority (Ewura) Head of Communication and Public Relations, Titus Kaguo said that BPS has proved to be a system which both consumers and suppliers are happy with and has helped lowered pump prices for fuel, increased government revenue and restored some sanity in the oil trading business.

“The system has helped in improving quality of petroleum products, stabilized cup prices, improved taxation and has helped to reduce demurrages at the port.

Apart from transparency and increasing government revenue, the BPS has also assisted the country to save foreign currency used to purchase petroleum products,” he said.

ENOC Africa, which recently expressed its intention to heavily invest in storage facilities in Tanzania and neighbouring countries, has proved its ability to ensure sustainability in oil supply in Tanzania by winning the tender for the third time. Tanzania consumes about 1.54 million cubic meters per annum of petroleum products.

Algerians outraged over latest corruption accusations against state oil and gas behemoth


Fox News

March 3, 2013 / Associated Press

ALGIERS, Algeria –  Corrupt and gorging itself at the trough of Algeria’s vast oil wealth — that’s how most Algerians privately view the elites running the country. Yet few have been willing to say so publicly, until now.

New corruption scandals are shining a new spotlight on state oil company Sonatrach, which jointly with BP and Norway’s Statoil runs the desert gas plant that was the scene of a bloody hostage standoff in January.

A recent anguished public plea by a former Sonatrach official shocked Algerians and raised hopes that the leadership will try to clean up the oil and gas sector in Africa’s largest country.

There’s plenty at stake: Algeria is also one of the continent’s richest countries, as the No. 3 supplier of natural gas to Europe, with $190 billion in reserves, up $8 billion in the last year alone.

The Feb. 18 letter by former Sonatrach vice president Hocine Malti in the French-language Algerian daily El Watan broke the silence around the company. Addressing the shadowy leader of Algeria’s intelligence service, it asks if he is really serious about investigating new bribery scandals involving Sonatrach and Italian and Canadian companies.

When Italian prosecutors in January announced an investigation into oil company ENI and subsidiary SAIPEM for allegedly paying €197 million ($256.1 million) in bribes to secure an €11 billion contract with Sonatrach, it provoked a firestorm in the Algerian media, until the North African country’s justice system finally announced its own inquiry Feb. 10.

Malti, author of the “Secret History of Algerian Oil,” scoffed that Algerian authorities were only following the lead of international investigators and wondered if Mohammed “Tewfik” Mediene, the feared head of the Department of Research and Security, would allow the real sources of corruption to be tried in court.

“Is it too much to dream that some of your fellow generals, certain ministers or corrupt businessmen — members of the pyramid that you are on top of — members of this fraternity, might also end up in front of justice?” he asked in the letter. “Or will it be like always, just the small fry are targeted by this new investigation?”

“Will we have to continue to listen for news from the Milan prosecutor to know the sad reality of our country, to discover how certain people, whom you know quite well, people you have come across in your long professional career, have gorged themselves on millions of dollars and euros of the country’s oil revenues?” he added.

The response to the letter was swift. Energy Minister Youcef Yousfi promised that once an investigation was complete “we will take all necessary measures” against those harming the interests of the nation.

President Abdelaziz Bouteflika, who rarely appears in public, said in a written statement, “these revelations provoke our disgust and condemnation, but I trust the justice system of our country to bring clarity to the web of accusations and discover who is responsible.”

Malti told The Associated Press by telephone from his home in France that he wrote the letter partly out of anger that Algeria had to rely on foreign prosecutors to reveal the extent of its own corruption and addressed it to the head of intelligence to shock people.

“It made a lot of noise because with this letter, I broke a taboo,” he said. “The head of the DRS is an unapproachable figure in Algeria, at times we can’t even pronounce (say) his name.”

It is not the first time the state-owned hydrocarbon company, which provides Algeria with 97 percent of its hard currency earnings, has been enmeshed in scandal.

In 2010, its head, three of its vice presidents and the minister of energy were all fired in a corruption investigation run by Mediene’s intelligence agency.

However, rather than restore faith in the country’s corruption-fighting mechanism, the 2010 purge was widely seen as a chance to settle scores between the DRS and Bouteflika, since most of those fired were his close associates.

Algeria ranks 105 out of 176 in Transparency International‘s 2012 corruption index, and the occasional corruption investigation often just seems to be how the elites settle their scores, such as a string of revelations about prominent politicians in November, which observers said were linked to next year’s presidential elections.

“I realize that people might be shocked by what is happening at Sonatrach — these scandals are terrible and we condemn them as individual acts,” Sonatrach head Abdelhamid Zerguine said on the radio Sunday, the anniversary of Algeria’s 1971 nationalization of its oil industry from the French. He promised to fight further corruption “with utmost vigor,” even while denying it was systemic.

The scale of the scandals is staggering. Nearly €200 million ($260 million) was paid out by the Italians, according to the Milan prosecutor. ENI has pledged full cooperation with prosecutors in their investigations.

Meanwhile, according to a joint investigation by Canada’s Globe and Mail newspaper and an Italian business paper published Feb. 22, Canadian company SNC-Lavalin paid a series of bribes of its own to secure a $1 billion engineering contract. Company spokeswoman Lilly Nguyen responded to queries about the case saying “to the best of our knowledge, SNC-Lavalin is not specifically under investigation in the Sonatrach matter.”

With commissions on deals like this going to the highest levels of power, the Algerian press rarely reports about it — until the subject is broached by the foreign media.

Malti, who was there at the founding of Sonatrach in 1963, estimated that the country was losing between $3 and 6 billion annually to corruption in the oil sector alone.

“If a judge says that an inquiry has opened or even a minister promises to take measures against ‘people working against Algeria’s interests,’ I don’t believe them,” Mohammed Saidj, a professor of international relations at Algiers University, told the AP. “It’s just words to appease a public opinion shocked when it hears about the corruption and billions of dollars stolen by high-level political and military officials, including those close to the president.”

The chances of this situation changing are dim, considering how much the country relies on a single company.

In a chapter on Sonatrach in the 2012 book “Oil and Governance,” John Entelis, an Algeria expert at New York’s Fordham University, described the importance of a company established just a year after Algeria won its independence from France, and wrote, “Algeria’s governing elite rely upon Sonatrach for revenue from which they gain power, patronage, and privileges.”

Entelis told AP that the letter in El Watan shows that Algerians are increasingly able to complain about this system, even if that won’t necessarily change things.

“This is the heart of the Algerian political system — Sonatrach, the DRS, civil society in the form of … willingness to make these things public. Some say this is what enables it to maintain itself instead of collapse,” he said.

___

Paul Schemm reported from Rabat, Morocco. Associated Press writer Karim Kebir contributed to this report from Algiers, Algeria.

Analysis: New law fails to ease oil concerns in Uganda


IRIN NEWS

KAMPALA/NAIROBI, 13 December 2012 (IRIN) – Uganda’s parliament recently passed a law to govern the exploration, development and production of the country’s estimated three billion barrels of oil, a resource whose extraction will directly affect the livelihoods of tens of thousands of people.

While the law streamlines the burgeoning industry, analysts have raised concerns over transparency and over who controls the sector.

“The new law helps set clear guidelines under which the oil sector is to be run and managed, and makes clear who is in charge of what roles,” said Tony Otoa, director of Great Lakes Public Affairs (GLPA), a Uganda-based think tank focusing on oil and governance. “However, there are some concerns about transparency and too much power within the oil industry in the hands of the president.”

The bill was passed on 7 December after weeks of wrangling over its controversial Clause 9, which gives the energy minister wide-ranging powers, including authority over the granting and revoking of oil licenses, negotiating and endorsing petroleum agreements, and promoting and sustaining transparency in the petroleum sector. Many members of parliament (MPs) felt these powers should be held by an independent national oil authority.

“Essentially, the standoff, which has ended, was about the withdrawal of trust from a government that is battered by corruption scandals. Also the way the cabinet operates is that, in the past, the feeling has been that some key ministries, like finance, are effectively run by the presidency after being stuffed by yes-men or -women. The pushback against Clause 9 also comes as the Central Bank opened its vaults to a large withdrawal in 2010 [US$740 million to buy six fighter jets] only for approvals to be sought retrospectively,” said Angelo Izama, a Ugandan journalist and oil sector analyst.

“Loss of trust”

“This loss of trust is behind the resistance to greater control by the executive,” he added. “The executive has not been a bad shepherd of the process so far. Uganda’s negotiating position has been tougher with the oil companies, ironically, without the oversight of parliament. However, public scandals elsewhere have negatively affected the ability of the president to convince lawmakers – especially of his party – that he means well.”

A number of donors – including the UK and Ireland – recently suspended aid to Uganda following allegations of deep-rooted corruption in the Office of the Prime Minister. The prime minister, the former energy minister and the foreign affairs minister were all accused of taking kick-backs from oil companies in 2011, charges that remain unproven but that nevertheless damage the reputation of the government.

“The country lacks trust in the state… Institutions and officials have lost legitimacy, and for such an important bill to vest too much power into a political appointee is a recipe for disaster,” said Stephen Oola, a transitional justice and governance analyst at Uganda’s Makerere University Refugee Law Project.

“Granting and revoking licenses and negotiations are technical in nature. We need an independent commission or authority made up of people of good competence, technical ability and experience, and good morals to guard our oil,” said Frank Gashumba, a local businessman and social activist.

Proponents of Clause 9 say licensing powers are safer in the hands of the cabinet than under an oil authority. “The authority is open, easy to bribe and manipulate. Cabinet is bigger than the authority – members of the executive are answerable to Ugandans because they are elected leaders,” said Kenneth Omona, a ruling party MP.

Those opposed to it say they will challenge the law, which was passed with 149 votes in favour and 39 against; some 198 MPs did not turn up to vote.

“The fight is not complete; the passing of the bill is liable to be challenged in courts of law,” said Theodore Ssekikubo, ruling party MP and chair of the parliamentary forum on oil and gas. “If we fail to go to court, we shall subject the matter to a referendum for all Ugandans to pronounce themselves on this strategic resource. We want to ensure transparency and accountability in the oil sector.”

Transparency

There are also concerns about the law’s confidentiality clause, which limits the amount of information accessible by the public.

“The law is lacking transparency – it imposes confidentiality on officials working within the sector, even after they leave office, so there is no opportunity for whistle-blowing or for the public to have access to information on, say, production-sharing agreements,” GLPA’s Otoa said.

He noted that Uganda still hasn’t joined the Extractive Industries Transparency Initiative (EITI), an international scheme that attempts to set a global standard for transparency in oil, gas and mining, further compounding the sector’s lack of transparency. As a member of the EITI, Uganda and oil companies involved in the country would be required to publish all payments and revenues from the industry.

While Total and the China National Offshore Oil Corporation (CNOOC), two of Uganda’s major oil partners, are listed on Wall Street and are therefore subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act – which requires disclosure of payments relating to the acquisition of licenses for exploration and production of oil, gas and minerals – the Irish firm Tullow Oil, another of Uganda’s main oil partners, is not under any similar obligations.

“I am worried we [legislators] and the public can’t access and scrutinize these agreements. You can imagine the recently negotiated and signed oil agreements have not been accessed by the public, not even by members of parliament,” Beatrice Anywar, former shadow energy minister, told IRIN.

The impact of the oil sector has so far been most acutely felt by communities around Lake Albert, thousands of whom have had to move – some willingly and some forcefully – to make room for an oil refinery, which is expected to take up 29sqkm and displace some 8,000 people.

Land issues

“The government is prosecuting the refinery resettlement by the book. However, managing public expectations and the process of multiple decision makers in Uganda’s complex land legal system [Uganda has multiple land systems, including customary, leasehold and freehold] has contributed some volatility to the process… What is adequate compensation? And who determines that? Is it the market or should this be done by the government?” said journalist Izama.

“As a partner to the oil companies, it’s questionable too if the government can make the best decisions for the affected people as it would look to keep project costs fairly low,” he continued. “It is still a dilemma which is jurisprudential as well as political.”

He noted that much of the oil is in game reserves and a sensitive basin with lakes, rivers and a rare biodiversity, and borders the Democratic Republic of Congo, which could also pose challenges for peaceful production; there has already been some tension between the two countries over their boundaries within Lake Albert.

“The process of consensus-building is still weak, and regardless of how it’s arrived at, displacements will create uncomfortable realities, including land and job pressure.”

According to Otoa, Uganda’s lack of a comprehensive land policy makes compensation issues more complex. “We need clear land policies to ensure people are properly compensated – there is a Resettlement Action Plan in place, but it has not been implemented, and a draft land policy has not been actualized, leaving these communities vulnerable,” he said.

He noted that the lack of education among the local population, both in the oil-rich areas and the rest of the country, had contributed to the continued problems in the sector.

“We have focused too much on educating MPs on the implications and importance of good oil governance. We need to move to people-centred approaches and encourage dialogue in the public sphere, which will lead to people demanding accountability from their MPs and the government,” he added.

Ultimately, Izama said, responsible actions by the government will be the difference between Uganda’s oil making a significant impact on the country’s economy or causing conflict and greater poverty.

“Pressure on public institutions prior to commercial oil production is an effective way of counteracting the resource curse. If this public engagement falters, if the transition [from President Museveni to his successor] is volatile, some of the scenarios of the so-called oil curse are possible,” he said. “Overall the tensions are high, but responsible actions by public and political institutions like the past debate show progress is possible.”

Nigeria: ‘Oil-gas sector mismanagement costs billions’


BBC News Africa

October 25, 2012

A leaked report into Nigeria‘s oil and gas industry has revealed the extent of mismanagement and corruption that is costing billions of dollars each year.

The report, seen by the BBC, was commissioned by the oil minister in the wake of this year’s fuel protests to probe the financial side of the sector.

It says $29bn (£18bn) was lost in the last decade in an apparent price-fixing scam involving the sale of natural gas.

It also calculated the treasury loses $6bn a year because of oil theft.

Nigeria is one of the world’s biggest oil producers but most of its people remain mired in poverty.

The Petroleum Revenue Special Task Force report is one of several commissioned by the government – and follows an outcry after a parliamentary investigation uncovered a massive multi-billion fuel subsidy scam.

That had been set up after angry nationwide protests in January when the government tried to remove a fuel subsidy.

Earlier this week, a campaign was launched to clean up Nigeria’s oil sector.

It was led by Patrick Dele Cole, a politician from the oil-rich Niger Delta region, who said that 90% of the stolen oil was refined in eastern Europe and Singapore.

The BBC’s Will Ross in Lagos says this leaked report exposes the extent of the rot in Nigeria’s oil and gas industry – all the way from the awarding of contracts to the sale of refined products.

It is staggering just how much money the people of Nigeria appear to be missing out on, he says.

Nigeria’s Oil Minister Diezani Alison-Madueke declined to comment on the specifics of the probe but said a report compiled from several committees set up earlier in the year to investigate the oil and gas sector was in its final stages and would be presented to the president soon.

‘Total overhaul’

The Petroleum Revenue Special Task Force, headed by former anti-corruption chief Nuhu Ribadu, revealed in its report that losses of revenue to the treasury over apparent gas price-fixing involved dealings between Total, Eni and Shell and government officials.

The report does not suggest the companies broke the law but called for measures to be put in place to ensure all transactions are more transparent.

It said that oil and gas companies owe the treasury more than $3bn in royalties.

For the period 2005 to 2011, it said $566m was owed in signature bonuses – the fees a company is supposed to pay up front for the right to exploit an oil block.

The report looked at the issue of discretionary licences which companies do not have to bid for.

Between 2008 and 2011 it found the Nigerian government had handed out seven discretionary licences, from which $183m in signature bonuses had not been paid.

A Shell spokesman said the company would not comment as it had not yet seen the report.

Our correspondent says it is well known that oil theft is a major problem in Nigeria, but the report says it may be reaching emergency levels as 250,000 barrels of crude oil could be being stolen every day – 10% of annual production.

The leaked report said that small-scale “pilfering” had been “endemic since at least the late 1990s”, but it also said it had heard allegations about thefts from crude export terminals, tank farms, refinery storage tanks, jetties and ports.

“Submissions to the Task Force alleged that officials and private actors disguise theft through manipulation of meters and shipping documents,” the report said.

“Yet there is also evidence that members of the security forces condone and, in some cases, profit from theft. The void in effective security likewise appears to increasingly hand over control of coastal and inland waterways to undesirable elements.”

The investigation showed that 40% of refined products – either refined in Nigeria or imported – currently being channelled through state-owned pipelines are lost to theft and sabotage.

Mr Ribadu’s investigation calls for a total overhaul of the industry with an oil sector transparency law requiring all companies to report all payments and publish all contracts and licences.

The Task Force also wants a special financial crimes unit to be established specifically for the oil and gas sector.

Nigeria : The great $6.8bn oil scandal


The revelation of gargantuan levels of corruption in the government’s fuel subsidy programme is sparking a groundswell of activity among the opposition and civil society groups.
Opposition politicians, civic activists and trade unionists are joining forces this month to demand action against grand corruption at the heart of government. They promise it will be their biggest show of strength on Nigeria’s streets since protests in January that forced the government to back down on its plans to abolish the fuel subsidy scheme.
At the core of the opposition protests in June will be the findings of a parliamentary report released on 23 April that reveals the government presided over the loss of $6.8bn from its fuel subsidy programme from 2009-2011 through theft and mismanagement.
The government misread public feeling on the fuel subsidy,” says Tunji Lardner, executive director of Lagos-based information platform WANGONeT. “Hundreds of  thousands of small businesses and millions of jobs were set up the basis of the subsidy – protecting that and prosecuting corruptionis a popular cause,” he explains.
Adding to the opposition’s anger are allegations that more than N4.5bn ($28m) has been stolen from pension funds administered by the office of the head of the civil service. State investigators suspect the extent of pension fraud in the country is far larger.
This, together with the government’s announcement expected on 1 June that it will increase electricity tariffs by 50%, will ignite a new round of popular outrage, say activists. A government commissioned report on corruption in the oil export sector, coordinated by former anti-corruption czar Nuhu Ribadu, is also due out in the coming weeks. Insiders say it will make more explosive revelations. National secretary of the Conference of Nigerian Political Parties Osita Okechukwu says: “It’s a perfect storm for the government.Weare taking them to the High Court for breaching the constitution, but you will also see protests backed by opposition parties and the trade unions.” Read more.

Ghana Struggles to Cash in ‘Black Gold’ Dreams of Oil Riches


Die Welt

July 12th, 2012

By Christian Putsch with K. Owusu Peprah
DIE WELT/Worldcrunch

SEKONDI-TAKORADI – The route to the training center is a crumbling asphalt road losing its battle with encroaching vegetation. The guards sitting in a wooden hut to our right barely look up as we drive past. Ebow Haizel-Ferguson is the director of the training center where we are heading; officially called “Sigma Base Technical Services,” it is Ghana’s largest “oil school.”

Steering the car to the left and through the thicket, a view suddenly opens up on to a railway graveyard. Haizel-Ferguson says proudly: “You’d be surprised what we’ve achieved out of nothing.”

Rust is eating its way through scrapped cars surrounding a large hangar. Through the dusty windows of the building, alignments of long work-tables can be seen. This is where in recent months Haizel-Ferguson and his team have taught 2,000 young people welding, pipefitting and other skills — but not for the rail sector: they’re only renting the premises in the Ghanaian coastal city Sekondi-Takoradi from the train company.

Since the 2007 discovery of the Jubilee offshore oilfield — one of the largest oil deposits ever found in Africa — only one thing has mattered in Ghana: black gold. For the country’s people it means the hope of better economic times. Investments in oil-drilling infrastructure have boosted growth by over 13%. And the rapidly expanding city of Sekondi-Takoradi is at the center of it all.

So is Haizel-Ferguson, who worked at Nigeria’s oil metropolis Port Harcourt for 22 years. The tall Ghanaian entrepreneur says he knows everything there is to know about oil: “I’ve breathed it, drunk it, and puked it.”

But Nigeria’s path is unfortunately one that Ghana is in danger of following. After decades of pollution by oil companies, oil thieves, and rebels, the Niger Delta is one of those places on the planet that look as if it’s straight from of an apocalyptic science fiction set. And while western oil companies lure employees to Nigeria with the highest bonuses in the world — a senior manager can earn 320,000 euros a year — Nigerian government figures say local firms account for only 18% of the value-creation process.

Very few Nigerians benefit from the commodity, and the oil boom has cost countless fishermen and farmers their livelihood. It is only in the last few years that laws relevant to granting supplier contracts have been tightened with the intent that two-thirds of them will go to Nigerian companies.

Cautionary tale

What happened in a country only some 100 km away is a cautionary tale — and Haizel-Ferguson wants to make sure the story doesn’t repeat itself in Ghana.

Expectations here are high indeed. Although so far the oilfields have produced less than expected, the Ghana Oil and Gas Service Providers Association (GOGSPA) says that the industry could create 100,000 jobs for Ghanaians. Two years ago, the Ministry of Energy promised a more cautious 10,000new jobs — and in early June 2012 announced that only 813 jobs have opened up so far. Meanwhile, as oil infrastructure is being built up, Ghanaian companies complain about how few of the contracts they obtain.

Others are benefitting instead. China, for example, which gave Ghana a 2.4 billion euro loan to construct oil infrastructure, is being paid back with 13,000 barrels per day. That’s a cheap price for the Asians who have also stipulated that a significant number of contracts be awarded to Chinese companies.

What clearly has little bearing is that five years ago the Ghanaian government drafted laws stipulating that companies like Tullow Oil (USA) and Kosmos Energy (Great Britain) had to award 90% of contracts to local firms. In any case, these laws have yet to come into force.

But all of this has not dimmed the hopes of many Ghanaians for well-paid jobs. And it’s why Haizel-Ferguson is schooling young men and women in oil industry skills at the old railway training center. “They are now qualified to apply for jobs. Bear in mind that the construction of oil industry infrastructure will be going on for another 20 years at least,” he says. “But so far they’ve not been giving the work to Ghanaians.”

If it is the largest, Haizel-Ferguson’s “Oil and Gas Skills Training Workshop” is by no means the only oil industry training center in Ghana. On the streets of Sekondi-Takoradi you see hundreds of posters advertising such institutes. All of them promise that a certificate from their school guarantees a job in the industry.

The offer is seductive to many. It didn’t take long to persuade Emmanuel Opoku-Agyeman, for example, who quit his job in the marketing department of a newspaper to pursue training. “It isn’t just Ghana that’s got oil, they’re discovering new fields all over Africa,” says the 31-year-old. “With a certificate, you can apply for jobs anywhere.”

Opoku-Agyeman earned 500 Ghana Cedi — about 200 euros — a month at his old job. In Takoradi, the “oil schools” hand out documents stating that the minimum monthly salary for a job on an oil rig is the equivalent of 2,800 euros – 14 times what Opoku-Agyeman was making. With prospects like that, it didn’t seem to him that what the Harvard Marine Petroleum Training Institute (HMPTI) was asking for a three-month course — $3000 (2,394 euros) — was excessive.

On the job market

The HMPTI’s Australian investors have made over an old office building where experienced oil industry engineers give the courses. Proudly, Opoku-Agyeman takes me on a tour of the premises and tells me about the packed days of learning, the great equipment the facility offers, the competent teachers. As one of the first 200 graduates, he’s now on the job market. He says he’s only going to start getting nervous if he hasn’t found something within the next few months — and he shouldn’t even be thinking that way, he says, there are no grounds for it, he has received excellent training “as you would expect from a Harvard school.”

No, there is no connection to Harvard University in the United States, school director Ron McGrath concedes. “The important thing is that we are qualifying young Ghanaians to work in the oil sector,” he says. The focus is not on the jobs requiring very high-level qualifications, but on occupations on the supplier side: “Future international regulations will require workers in the sector to have attended courses such as ours.”

McGrath doesn’t believe Ghanaian black gold expectations are too high, nor is the price charged by his institution. “Training in this field just is expensive, you need a lot of equipment and the teachers have to have top qualifications.”

Along with the government, schools like the HMPTI urge people to be patient. Coming up for reelection in December, President John Atta Mills has promised that oil revenues will be used to build up the infrastructure of the entire nation. And all you need to do is travel through Ghana for a few days to see the huge expectations such promises unleash in a country that is still one of the world’s poorest.

Five hours away from Sekondi-Takoradi is the village of Awukuguanyensi. Most of its population of 130 work as farmers. As you enter the village you pass a wooden sign that reads: “No electricity, no votes.” It’s a pretty empty threat, born of desperation — one way or the other, the village is likely to have to wait a long time for power lines to be put in.

On the day of my visit, the children of Awukuguanyensi are being vaccinated against Pneumococci and rotavirus for free. In Ghana, these two fatal diseases account for 20% of child mortality. Thanks to the GAVI Alliance’s mission to provide free vaccines to children in developing countries, 87% of the children in this area have been vaccinated — although overall the situation in the country is far away indeed from one of the major UN Millennium Development Goals, which is to reduce, by 2015, child mortality by two-thirds from what it was in 1990.

In this village, many families have lost a child to illness brought on by the miserable living conditions. And those who do make it past childhood face bleak perspectives. Isaac Kwasi, 25, says all he ever wanted was to be a farmer, but you can’t make a living from it. So many of his friends have moved to Sekondi-Takoradi. He sometimes gets text messages from them saying they still don’t have full-time jobs. But that’s not holding him back. Next year, he says, he’s moving too — to Takoradi, and its promise of black gold.

Read the original article in German.

Nigeria: FG, Oil Firm to Establish Two Refineries Worth U.S.$4.5 Billion


AllAfrica

By YEMI AKINSUYI,

July 9th, 2012

The Federal Government has signed a Memorandum of Understanding (MoU) with the Petroleum Refining and Strategic Reserve Limited (PRSR), a renowned America-Nigeria joint venture, for the construction of $4.5 billion two modular refineries in the country.

Each of the refineries, expected to be completed and launched within 12 to 13 months, would refine between 30,000 and 60,000 barrels per day (bpd) of crude oil, and produce five million litres of petrol, diesel, kerosene and LPFO per day.

Minister of Trade and Investment, Olusegun Aganga signed on behalf of the federal government while the chairman of PRSR, Chief Edozie Njoku, endorsed for the company at a brief ceremony held at the ministry’s conference room in Abuja.

In his remarks, Aganga said the new agreement was part of the government’s National Industrial Revolution Plan aimed at ending the exportation of raw materials and jobs from Nigeria to the West, while encouraging the transformation of the raw materials and exportation of finished goods, which add value to the economy.

Aganga said: “This is part of the paradigm shift we talk about. We have to stop exporting crude oil and therefore we need more refineries. With the signing of this deal, I am sure the two refineries which will cost about $4.5 billion will be launched in a year’s time”.

The minister, who reiterated the government’s determination to improve the business climate and make Nigeria the preferred investment hub in Africa and globally, informed that the firm had a history of performance and trusted track records; having delivered on bigger projects in Russia and other countries.

He assured the firm of government’s technical support needed to accomplish the task, saying that the Nigerian National Petroleum Corporation (NNPC) was actively involved in the deal.

Aganga, while justifying private sector involvement in government’s transformation agenda, informed that the Eleme Petrochemicals was now 30 times more productive than when it was in the hands of government.

Also speaking, the Chairman of PRSR said the two refineries were part of a 30-month plan to construct six modular refineries in strategic places in Nigeria, pointing out that his firm would build simple refineries, “that will help tackle the problems of Nigeria as against the existing complex refineries.”

Njoku added that the six refineries, when completed, would have a combined capacity to refine 180,000 barrels of crude oil within the country and produce up to 30 million litres per day of refined oil products within 30 months.

The chairman said: “The refineries would be operated for the benefited of Nigerians by eliminating the current subsidy regime and significantly reducing the current market prices of kerosene and diesel by as much as 50 per cent”.

“During the construction timeline, over 10, 000 Nigerians will be employed and once operational, the six refineries will create over 150,000 direct and indirect jobs”, he added.

On the possibility of completing the pilot refineries on schedule, he explained that “modular refineries are comparatively easy to assemble in a relatively short time period”, adding that the company would produce.

Speaking in the same vein, the company’s technical partner, Graham Ford, described Nigeria as investment destination and expressed their readiness to partner the country to overcome its perennial crisis in the oil sector.

Ghana: Terms of Super Oil Contracts Must Favour African Governments – Kan Dapaah


AllAfrica.com

BY LAUD NARTEY

July 20th, 2012

It has been suggested that the trend in which super attractive oil contracts tend to favour foreign interest must change in favour of revenue capture to finance much needed development in African countries.

The proposal is not oblivious of the worrying dangers associated with increased revenue capture such as encouraging attitudes on the part of private sector to reduce taxable income through transfer pricing, thin capitalization and justification for declaring losses. Besides, there is also the potential for abuse of revenues, corruption and rent seeking in the management of resources among public officials.

Hon Albert Kan Dapaah, Chairman of Public Accounts Committee (PAC) of Parliament, made these suggestions when he addressed the official opening of the Summer School of the Africa Regional Extractive Industries Knowledge Hub at the Ghana Institute of Management Public Administration (GIMPA) last Monday in Accra. The school brought together experts in the extractive industry from around the African continent.

According to him, the implementation of such an idea has become more compelling against the backdrop of reduction in exploration risks profile in the oil and gas industry as well as the decline of political risk factors in most African countries.

In the face of these potentials, he urged that government must continue to negotiate terms of contracts with openness and in the spirit of partnership to ensure that interest of all parties were fairly balanced.

Hon Dapaah, who is also Member of Parliament for Afigya Sekyere West, accordingly called for the strengthening of Parliament and other institutions of State to ensure due diligence in contract ratification, budgeting and generally strong oversight in the management of extractive industries.

Similarly, revenue collection agencies must be supported with the capacity and will power to audit the cost of oil and mineral companies and collect appropriate revenues due the State.

He lamented poor development outcomes in many resource rich countries have led to citizens demanding that governments collect large shares of resource rent to finance development. He cited Ghana, Tanzania and Zambia as examples of countries which have embarked on reforms in their respective sectors to increase revenue.

In a speech read on his behalf, the Minister for Energy, Dr Joe Oteng Adjei, noted that Ghana had signed on to the Extractive Industry Transparency Initiatives (EITI) for the purpose of strengthening transparency and accountability in relation to revenue and payments from operators within the sector.

The initiative, which hitherto, was limited to the mining sector, has now been extended to the oil and gas sector.

He said government has given expression to its desire to ensure transparency in the sector by preparing a draft EITI Bill ready for submission to Parliament.

The purpose of the Bill, he said, was to provide the legal framework, and ultimately to enhance transparency and accountability in relation to payments originating from the natural resource sector of the economy and receipts by government.

A participant from Zambia, Lucy Bwalya Munthali, in an interview with the Public Agenda said, she expected that this year’s Summer school would equip her with new skills which would help her contribute to reformation of the extractive industry in her country.

She noted that African leaders were not doing enough as far as the industry was concern and this stemmed from the implementation of inappropriate policies.

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