The Institute of Economic Affairs (IEA) 2015 P-TRAC Index project has revealed that there is no transparency in the awarding and signing of oil and gas contracts signed by government.
This was contained in the IEA’s 3rd transparency and accountability report regarding the management of Ghana’s oil and gas resources.
A press statement issued by the IEA noted that the only improvement made in awarding of government contracts as far as transparency is concerned is “the establishment of the Petroleum Commission to regulate the sector and to advise the government on the award of contracts and licenses.”
It further noted that the research capacity of Parliament remains “weak.”
The IEA therefore called for a more open and transparent process of awarding contracts and licenses and further urges government to adequately resource Parliament and the other oversight agencies to enable them to effectively discharge their duties under the Petroleum Revenue Management Act.
This is not the first time concerns have been raised over the lack of transparency in the awarding of government contracts.
The Chairman of Parliament’s Public Accounts Committee (PAC),Kwaku Agyemang Manu earlier asked government to stop the practice of sole-sourcing in awarding contracts for national projects.
The Index also focused on other key aspects of the management of oil and gas revenues.
Revenue, Expenditure and the Ghana Petroleum Funds
Transparency in each of these areas is assessed on the basis of a series of questions. The P-TRAC Index is constructed as a simple average of the questions for each of these four components.
Benchmarked against the previous two P-TRAC reports, this year’s report allows us to assess how much progress has been made in enhancing transparency and accountability in Ghana’s oil and gas industry.
The conclusions from this year’s assessment are summarised as below.
Revenue Transparency
The IEA observed a steady progress in efforts to improve revenue transparency over the previous two reports. The main improvements have come from the frequency and availability of reports.
The IEA however did not find any improvement in the quality of the reports.
It said “one component of revenue transparency where there is much room for improvement is the institutional environment.”
“Progress in this area hinges on Parliament passing two important pieces of legislation that are currently before it.These are the Right to Information Bill and the Petroleum Exploration and Production Bill, both of which have gone past the first reading stage,” the policy think tank said.
According to the IEA, “Speedy passage of these Bills will significantly help to improve transparency and accountability in the industry,” Other Bills that are currently in draft form include the Ghana Extractive Industries Transparency Initiative (GHEITI) Bill, the Local Content and Local Participation Bill, and the Marine Pollution Bill. We strongly advocate the passage of these Bills.”
Expenditure Transparency
In the area of Expenditure Transparency, the IEA observed an improvement in the frequency of the reports.
It however did not find any change in the quality of the reports.
“We also observed improvement in our Projects sub-index, which tracks progress in the allocation of funds and distributions of projects under the Annual Budget Funding Amount (ABFA),”the IEA added.
It said “in the absence of a long-term development plan for Ghana, decisions on expenditures in the priority areas are at the discretion of the Minster for Finance. Neither Parliament nor the Civil Society Organisations play any major role in decisions on the allocation of funds or projects to be funded. ”
The IEA therefore advocated “the formation of a committee with representation from all major stakeholders to advise the Minister on the expenditure program.”
The Ghana Petroleum Funds
The IEA said “transparency in the management of the GPFs showed the highest improvement out of the four components of the Index over the reporting period.”
“The maximum score was attained in four out of five questions. The key area requiring improvement here is the publication of information on the performance of the GPFs.”
The study also made some policy recommendations which are below
Policy Recommendations
The study makes the following recommendations:
- We advocate the speedy passage of the Right to Information Bill and the Petroleum Exploration and Production Bill, which have both gone past the first reading stage. Parliament should give serious consideration to the following draft Bills: the Ghana Extractive Industries Transparency Initiative Bill, the Local Content and Local Participation Bill, and the Marine Pollution Bill. Passage of these Bills will greatly enhance the level of transparency and accountability, not only in the oil and gas sector but also in the other resource industries.
- We also advocate speedy passage of the Budget Act to enhance Parliament’s ability to conduct comprehensive analysis of the Budget.
- We recommend the formation of a committee with representation from all major stakeholders to work with the Minister of Finance in selecting projects for funding under the ABFA.
- To enhance transparency in the award of contracts and licenses, we recommend a more open and transparent process of awarding contracts and licenses, with more public disclosure of information about the process. In particular, we advocate a points-based system for assessing licenses and the award of contracts.
- Oversight bodies such as Parliamentary Committees (e.g., the Public Accounts Committee and the Select Committee on Minerals and Energy) and the PIAC must be adequately resourced to enable them function more effectively in their respective roles.
Credit: citifmonline