Africa's Public Procurement & Entrepreneurship Research Initiative – APPERI


Public Accounts Committee

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


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.

Uganda IGG Clears Mbabazi of CHOGM Mess, Raises Eyebrows

By Julius Barigaba and Alfred Wandera

June 26,  2011

Nairobi — The office of the Inspector General of Government is battling a fresh credibility crisis following its decision to clear Uganda’s Prime Minister Amama Mbabazi of graft allegations in the 2008 Commonwealth Heads of Government Meeting (Chogm) scandal. Analysts have accused the body of lacking independence and furthering the political interests of those in power, rendering it ineffective in fighting the corruption that is draining billions of dollars from Uganda’s economy.

Mr Mbabazi, a former security minister, was implicated along with several other political heavyweights, including former vice president Prof Gilbert Bukenya, in value for money audits by the auditor general and parliament’s Public Accounts Committee…”I have my misgivings about the office of the IGG,” says Miria Matembe, former ethics and integrity minister. “When [former IGG] Jotham Tumwesigye was in that office, there was independence. He did his investigations and made reports without encountering political interference. But the current IGG tends to be selective.” Read more.

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