Despite fears among some Ghanaians that the country might be slipping the dangerous path of what has been termed ‘the oil curse’, the situation whereby oil producing countries have failed to benefit from their oil resources and instead have plunged into poverty, debt and social chaos, Ghana has been singled out to be far from that situation.
Raziah Khan, an analyst with Standard Chartered said on a BBC broadcast monitored by ghanabusinessnews.com, that Ghana won’t experience the ‘oil curse’ because the country is doing so many things right.
She said the country took the right decision in hedging its oil at $107 per barrel. She explained that by hedging oil, Ghana has the option of selling its oil at $107 per barrel on the international market even if the prices fall below that.
Ghana’s Minister of Finance, Dr. Kwabena Duffuor has said that the country is hedging 100 percent of its share of production from the Jubilee oil field at $107 per barrel. The decision, he said is to limit the impact of volatile prices. He indicated that the move is a ‘risk management’ scheme to protect the country’s budget against oil price fluctuations.
Ms. Khan also commended Ghana for passing the ‘Oil Revenue Management Law’ which allows the country to establish a ‘Heritage Fund’ in which to make savings for future generations.
Ghana’s Parliament, Wednesday March 2, 2011 passed the Petroleum Revenue Management Bill. Clause 5 of the law would allow Ghana to collateralize the country’s oil revenue. In other words, it would allow the government to borrow against any future oil revenues. It would also set-up an independent regulatory body to regulate the oil industry in the country.
Indeed, on May 27, 2011, the Offshore Petroleum (Health and Safety) was among 25 bills set to be put before Parliament at its second sitting.
However, writing an op-ed for ghanabusinessnews.com, freelance journalist and civil society activist, Stephen Yeboah argued that it is important that the country formulates a well thought out comprehensive oil response plan to counter any spillages and other possible negative impacts of the oil business in the country.
Ghana should not to be oblivious of the fact that oil companies prefer to pay a relatively low penalty for non-compliance with environmental standards rather than invest in costly pollution monitoring and control, he warned.
In his view, Ghana is being slack in instituting the right regulatory frameworks to check oil operations in this new but very important sector, and he concludes that, “sadly Ghana has began commercial operation of oil already but starting commercial oil production without strong exploration and production laws is exactly what the resource curse stands for.”
Ghana discovered oil in commercial quantities in June 2007 and commercial production of oil began on December 15, 2010 and Ghana’s Jubilee oil field is said to be the largest oil field to be discovered in West Africa in the last 10 to 15 years.
By Emmanuel K. Dogbevi