Why Mahama’s achievement in the Petroleum Sector is key to his second term bid

by | Oct 14, 2016 | Local News | 0 comments

I have been monitoring the campaign message of the National Democratic Congress since the launch of the party’s manifesto. I have noted that the president and his followers have been trumpeting the government’s achievements and have pointed out schools, roads, health facilities, water systems, ports and harbours, and other social interventions evidence of the government’s achievements.

As an energy watcher, I have been dismayed by the silence the campaign team is giving the presidents massive achievements in the petroleum sector. Why has the Mahama campaign not focused much on the petroleum sector? I am surprised. Totally.

In my view, the Petroleum Sector is a critical the lifeline of the Mahama Administration.  It has provided the critical fuels for development as well as provided some critical funds for the massive infrastructural and social interventions Ghanaians have seen and enjoyed over the last 4 years.

It is my well-considered opinion that any message to win the hearts of the voters for Mahama must factor in the president’s unprecedented achievements in the petroleum sector.

I wish to point out the monumental achievement of president Mahama with the view of inviting them to provide a second term platform for President Mahama to roll out some other projects which seriously impact the developmental path of this country.

Certainly, many Ghanaians saw the discovery of offshore oil in 2007 as an opportunity to overcome persisting structural weaknesses in the economy and believed in Ghana’s prospects of a fast paced development.

However, other country’s experiences (for example Zambia and Nigeria) show that if we do not properly manage our oil and gas resource windfalls we will face some dire consequences. It is clear that any misplaced steps in the allocation strategies of oil and gas revenues can harm the process of economic development instead of accelerating growth.

There are  loads of evidence which confirm  that countries depending heavily on natural resources tend to have less trade and foreign investment, more corruption, less equality, less political liberty, less education, less domestic investment, and less financial depth.

So I am pleased to see how cleverly President Mahama has used the petroleum sector revenues and projects  to leverage development in other key sectors of the economy such as provision of schools, hospitals and clinics,

President Mahama indicated in the 2016 NDC Manifesto that, “… we subscribe to a compassionate political philosophy that seeks to create opportunities for all to develop to their fullest potential. We believe that our pursuit of economic prosperity for all Ghanaians can best be achieved through appropriate regulation and strategic investments. We are therefore committed to using the legal, fiscal and trade instruments at our disposal, in an inclusive effort to safeguard the jobs of today and create the jobs of the future.”

It is very easy to see the importance the  nation attaches to the petroleum sector as  the Ghana Investment Promotion Center (GIPC) stated in one of its factsheets that  “the energy sector is the lifeline in the development of any nation.”  It is common knowledge that the Energy is composed of the power and petroleum sectors.  The Petroleum sector is made up of two sub-sectors – the downstream activities (i.e. finished products production, distribution) and upstream activities (i.e. exploration, development, production of oil and gas).

According to the NDC Manifesto, “Ghana’s oil and gas sector has been significantly transformed under the NDC Government. Relevant laws have been promulgated to promote and regulate activities in the industry. These laws have created a transparent oil and gas production and management regime. We have enacted the Petroleum Revenue Management Act, 2011 (Act 815), the Petroleum Commission Act, 2011 (Act 821) and the Petroleum Local Content and Local Participation Regulations 2013 (L.I.2204). Beautiful.

But there are other very special achievements which have to be highlighted in both the upstream and the downstream sub sectors. Some of the achievements I wish to point out include:

Upstream

  • Continued management of the Jubilee Fields for steady production. The cumulative production from the field as at September 2016 was approximately 181 million barrels of oil and 41 billion cubic feet of gas exported to Ghana Gas processing plant. About 80 million standard cubic feet of gas is supplied to plants to generate electricity
  • Commenced development of the Tweneboa, Enyenra-Ntomme (TEN) fields which will deliver about 80,000 barrels of oil per day and 50 mmscd of gas to fuel thermal plants for electricity generation
  • Progressed in the installation of FPSO Prof. J.E.A Mills as part of the development of the TEN fields.
  • Commenced development of the ENI/Vitol Sankofa fields which is expected to produce about 47 bpd of oil commencing the first quarter of 2017 and 180 mmscd in the first half of 2018.
  • A total of 18 Petroleum Agreements are in place and at various stages of delivery. 21 new major discoveries have been made since Jubilee and are being processed.
  • The Voltain basin which represents about 40@ of the country’s land mass is under intensive assessment by the Ghana National Petroleum Corporation (GNPC) to assess its oil and gas prospectively.
  • Completion of the Gas Processing Plant is which has the capacity of 150 mmmsc/d but is currently supplying about 80 mmmscf/d of gas for power generation. The plant is also producing about 500 metric tons of LPG per day, which is about 50@ of national demand.

Down Stream

  • Petroleum Pricing Deregulation which  has seen government removal of  subsidies from most petroleum products and redrafting the critical fund to  other key sectors of the economy
  • The Tema Oil Refinery (TOR) has been revamped and is currently in operation. A strategic partnership between TOR and BOST has brought back life to the refinery as BOST purchases crude for TOR to refine at a tolling fee.
  • BOST has begun supplying petroleum products to the land-locked countries of Burkina Faso, Niger and Mali from the Bolgatanga depot and by sea to Benin and Nigeria. There are plans to extend the exports to Liberia in the coming months as well. BOST has also successfully transferred 60 million litres of gasoline and gasoil (the equivalent of 1,200 truckloads) through the pipeline to the Bolgatanga Depot for export in the first half of 2016.
  • The restructuring of BOST has resulted in a turnaround in the performance of this strategic national asset which is now successfully fulfilling its mandate of ensuring availability of petroleum products. The National strategic stock is at an all-time high; with about 1million metric tonnes of products imported from January to June, 2016.

It is very easy to narrate and explain  the achievement of President Mahama in the petroleum sector  to the farmer of Bunkpurugu or the mechanic at Kabelensuazo or the market woman at Asesewa or the teacher at Agbogbloshie?

It is very simple to narrate and explain.

Funds from the sector have been invested to Improve standard of living of the people. The government has invested massively in schools, transport, hospitals, ports and harbours, water, and agriculture, etc.

In my view the infrastructure offer indirect benefits on rural quality of life by allowing people greater access to social services such as health clinics or schools.

The Health benefits for example are in terms of reducing mortality and morbidity are outcomes associated with the provision of safe drinking water and sanitation. This is an example of a social multiplier, because better health is not simply a good in and of itself but is also linked to higher incomes because healthier individuals have higher productivity and are more likely to be in the labour force. Similarly, if infrastructure investments allow children better access to schooling, improve their attendance or allow them to study more, this may lead to indirect, long-run benefits in terms of higher productivity or income.

Furthermore the many roads constructed by the president are essential for the smooth and cost-effective flow of goods and services within the economy and across borders. Open up rural areas for investment: Rural transport also has an important impact on the rural economy. Investment in rural roads and transportation results in reducing the cost of transportation of goods and passengers and tends to increase the share of farmers in the final realization of farm produce, thereby increasing their welfare. In rural areas infrastructure development has wide ranging impacts on individuals, households and communities both in terms of income and other quality of life indicators.

There are both direct and indirect benefits from infrastructure development and it is important to consider the indirect benefits in decision-making about infrastructure projects. Education, for example, can affect income and health both of that in turn affect quality of life. There are also strong social benefits from infrastructure that need to be taken into account. Economic benefits such as increased income, employment, productivity gain, better income distribution and opportunity for diversification are obvious.

The importance of developing infrastructure has long been recognized as central in promoting economic growth. Public infrastructure investments are closely linked to national output and in many countries to growth rates. Infrastructure is also viewed as enhancing the quality of life both through its effect on raising incomes as well as through providing access to goods, social services and information.

The infrastructure will deepen competition and create an enabling environment for the private sector to spearhead the country’s development: At the macro level, the stock of infrastructure is linked to a country’s competitive position and thus to investment and export earnings. Ghana‘s poor infrastructure emerged as by far the dominant perceived barrier to development in the most recent Enterprise Survey with some 49 percent of companies highlighting unreliable electricity supply as the biggest obstacle to growth. Access to water is also frequently cited by companies as an important constraint. Investments in increased power generation and distribution capacity as well as water availability have already been acknowledged as a priority.

As President Mahama campaigns for to be elected to a second term, it is important for the electorates to think about what he has achieved in the petroleum sector and how it affects investment in other key sectors of the economy.

I am particularly thrilled about the President’s commitment to manage and develop the sector. I will wish to see President Mahama have the opportunity to complete the following projects:

  • Complete the 150km reverse flow pipeline from the Aboadze power enclave to facilitate the transmission of dense gas to power plants in Tema;
  • Implement Phase II of the Gas Processing Plant project in preparation for the Greater Jubilee development;
  • Encourage more investment in exploration and production of oil and gas;
  • Support the private sector to establish petrochemical plants;
  • Construct a new and bigger Liquefied Petroleum Gas (LPG) pipeline to the jetty at Tema for more efficient discharge, storage and distribution of LPG;
  • Construct a second and bigger Single Point Mooring for petroleum products to ensure greater efficiency in the delivery of petroleum products into the country and to also make Ghana the petroleum hub for the sub-region;
  • Build a Liquefied Natural Gas (LNG) infrastructure to ensure continuous supply of natural gas to power plants;
  • Ramp up production at the Tema Oil Refinery (TOR) to its full capacity of 60,000 barrels per stream day (bpsd);
  • Construct a new 100,000 barrels per stream day (bpsd) refinery at the site of TOR based on the vision to make Ghana the hub for downstream petroleum production in West Africa;
  • Encourage BOST and GOIL to implement a door to door LPG delivery system;
  • Complete the 2D land seismic survey in the Volta Basin.

I wish to urge the President’s campaign team to highlight in very strong and bold terms the government’s achievements of the petroleum sector in the first term of office. They are very impressive.  I wish Mr Mahama will have a second term to do more.

But I have ONLY ONE VOTE.  Will you add your vote?  You should.  Because your vote is a vote for you. It is a vote for your future!!

 

By:Fonibi Larnor

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