The announcement made last week by the Minister of Energy, Mr. Boakye Agyarko, of the impending allocation of 9 new offshore oil blocks, quite rightly made the news. The Minister also stated, that in anticipation of improved production and revenue from oil, the government will more than double the amounts of oil revenue used to support the free secondary school education program.
And there are a few other minor details to dwell on. For all entities in the petroleum industry in Ghana, the paper work just got a tad more complicated.
Since 2013, when the Petroleum (Local Content and Local Participation) Regulations (L.I. 2204) was enacted, according to the Petroleum Commission (PC), whilst companies have regularly reported millions of dollars of in country spend, to date, none has provided or indeed it seems, been required to back up their claims with receipts, invoices or purchase orders. Until now.
From January 1, 2019 and likely into the foreseeable future, all international oil companies, their service suppliers, contractors, licensees and others in the value chain in Ghana’s oil and gas industry will be required to provide receipts and evidence thereof to validate their claims of purchases and payments for goods and services made locally.
In a slick pincer move coordinated with the Ministry of Finance, the Ministry of Energy, Ministry of Justice and Attorney General’s Office, the Regulator has already ordered the industry players to begin justifying all of their 2018 claims, by May 2, 2018. No more guesstimates and indications and taking liberties with the finer details. Or the truth.
Regulation 46 (6) of L.I. 2204 speaks for itself. ‘A person who fails to comply with a request to furnish information or a document under these Regulations within the period specified in the request is liable to pay to the Commission and administrative penalty of two hundred thousand penalty units in the first instance and a further penalty of ten percent of the penalty for each day that the document remains undelivered’.
Fascinating too no doubt, would be the reason why over the last 5 years, no one at the PC then, its Board and the supervising Ministry saw fit to follow through with this part of the Regulator’s mandate.
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According to the IMF, for the first time in 15 years, Ghana has actually managed to secure a primary surplus.
The press release that accompanied the announcement of a further tranche of $191 million to support debt management was widely complimentary of efforts to maintain fiscal discipline and strong leadership in enforcing banking regulations.
In March 2018, Parliament approved the government’s request to raise up to $2.5 billion in Eurobonds and Sovereign Bonds. For those who are closely monitoring, improved credit ratings and such details from the IMF will bolster their conviction, not of when the country will issue more sovereign bonds,not even the anticipated coupon rate.
Just as significant is speculation about which currency, besides the usual suspects the Sovereign Bonds could be issued in.
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At the Ghana Investment Promotion Center (GIPC), the currency in circulation is USD. They are still rounding off the numbers for the first Quarter however the Center says, it has recorded an estimated $1.13 billion of total investment between January and February 2018.
The building and construction sector attracted the bulk of investment, almost $950 million, close to $17 million was invested in manufacturing and a further $14 million went into the Services sector. The Center says the 16 registered projects produced 1,695 jobs.
In 2017, GIPC set what was then regarded as a throughly improbable ambition, attract $5 billion of Foreign Direct Investment into the country. By the end of the last quarter, total investment including from the Petroleum Commission, Minerals Commission and the Free Zones Board was recorded as $6.19 billion, with FDI inflows registered at US$4.91 billion, just shy of the original target.
Mission Impossible?
‘A man’s worth is no greater than the sum of his ambitions,’ is a quote attributed to Marcus Aurelius, Emperor of Rome who preached Stoicism, a philosophy whose main virtues are: Wisdom; Courage; Justice; and Temperance. Unconventionally, he also ruled jointly with his brother from 161 AD and then with his son for another 3 years.
It is not clear what Aurelius would make of the CEO of GIPC, Yofi Grant, the latter tends to wear arresting ties, socks, shoes and other accouterments. Grant has also recently won an award for excellence in the public service. He will have to pull something close to a miracle to meet his self declared objective of attracting $10 billion of FDI into Ghana by the end of this year. He may well be off to a good start, certainly on the courageously ambitious bit. And taking liberties with his colour combinations.
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