April 5, 2012:

Ghana will not pay even a cent as marketing cost for the 996,484 barrels of oil lifted on Tuesday, the sixth lifting since production began in December 2010. Tuesday's lifting is the first by Unipec, which has replaced Vitol, the company which carried out the first five liftings on behalf of Ghana at a cost of eight cents per barrel, our sources at the GNPC indicate. Coming on the heels of the news of that lifting is a submission by petroleum economist Mohammed Amin Adam to the effect that the Tema Oil Refinery (TOR), though technically can refine Ghana?s crude, is so inefficient that the yield per consignment will be too low and the refinery margin too high to return the desired benefit to Ghanaians. He therefore have no qualms if the Tema-based facility were to be closed down.

"Except for purposes of retaining employment, close down TOR," Mr Adam argued, explaining that the 10 percent refinery margin TOR offers to the Ghanaian public is too high and non-competitive compared to any international refinery. The refinery margin is the difference between the price at which TOR buys crude and the price at which it sells the products such as petrol (or gasoline), diesel, etc. He told Public Agenda that the refinery margin should not exceed six percent. ?Ideally it should be five to six percent," he said, stressing I'm serious about my suggestion because there are more? horrifying figures on TOR's operations which will vindicate this position. The suggestion, which went unchallenged at a stakeholder discussion on oil and gas in Accra on Wednesday was made within the context of a debate on the propriety of the Ghana National Petroleum Corporation's (GNPC) decision to exclusively sell its share of crude from the Jubilee Field on the international market.

The debate was triggered by Bishop Akolgo, Executive Director of the Integrated Social Development Centre (ISODEC), who had called for a reference price (or base price) for the marketing of Ghana's oil. This will enhance revenue tracking as well as help checkmate oil companies operating in Ghana. Mr. Akolgo was on Tuesday presenting an overview of a study into the Implementation Challenges of the Petroleum Revenue Management, and the Petroleum Commission Laws carried out by the Civil Society Platform on Oil & Gas.

National Interest

Participants were divided on whether it was suitable and in the national interest to continue to sideline TOR in the marketing of the Jubilee crude with some suggesting that whatever international exposure informed the earlier decision to sell the crude outside has been achieved and therefore GNPC must begin to look at TOR. Others were of the view that continued exposure of the jubilee crude on the international market while Ghana continues to import crude from other sources for TOR was proper.

Intervening, GNPC?s Sam Addo Nortey said it was important to provide for a reference price for Ghana?s crude in regulations but the absence of that currently is not a drawback because other mechanisms exist for the GNPC to do price determination as well as monitor the Jubilee partners. On the subject of selling to TOR, the GNPC official clarified that initially ?We wanted to market our crude on the international market for exposure.? However, ?if today they [TOR] want to process Jubilee crude, they can get letters of credit and come buy.? Kyeretwie Opoku, a member of GNPC's Board, reiterated that GNPC?s instructions are that they should get the best price possible and that is what the Corporation continues to do. However, if TOR has interest in the crude it has to make an offer. Nonetheless, "It is important for TOR's" shareholder to invest such that TOR is able to operate like many of the international refineries.

Report

The authors of the report on which the meeting was held, fault the Petroleum Revenue Management Act largely for loopholes in transparency and accountability provisions, raising specific issues relating to the effectiveness of the Public Interest and Accountability Committee, disclosure of accounting systems of oil companies, ministerial discretion and parliamentary oversight. The authors of the report suggest that while gaps still remain in the laws, these can be bridged through supplementary legislation, regulations, procedures and rules, so to ensure the conversion of hydrocarbon endowments into lasting benefits. The authors proceed to recommend, among others, for specific rules on indirect payments and all payments, asking that these be disaggregated and reported in a disaggregated manner.

By Allafrica.com