Editorial: Renegotiate oil contracts that are dormant

Overdependence on gas imports hurting investment in local sector

The Africa Centre for Energy Policy (ACEP) has again raised concern that government reviews exploration contracts of companies that have failed to invest in their oil blocks.

About 12 oil agreements awarded prior to 2016 are said to be idle. Delay in exploring and developing these blocks, ACEP contends, is denying the state of an opportunity to expand and sustain its oil industry, as well as, revenue for much-needed development.

ACEP believes a review of these contracts, will afford government an opportunity to renegotiate, or where possible cancel such deals because some of the companies holding oil blocks, lack the financial and technical capacity to execute them.

According to ACEP’s Head of Policy Unit, Pauline Anaman, after seven years if a company fails to make a discovery, the law requires that it relinquishes the block.

In spite of this, and repeated calls by ACEP, 12 oil blocks awarded between 2007 and 2016 remain idle.

Consequently, Ms Anaman insists ACEP will continue to call on the government to review existing petroleum agreements, and sanction non-compliant contractors.

She made this known at the launch of Ghana Contract Monitor Platform, an online tool that provides update on work progress of non-producing extractive sector companies who have valid agreements with the Government of Ghana to explore, develop, and produce petroleum and mineral resources in the country.

Evidence points to poor due diligence done on the financial and technical competences of the companies during contract award processes, as well as, government’s failure to strictly enforce contractual terms and impose sanctions upon breach.

That is why publicly available data on the performance of the companies would aid civil society and interested parties track performance. We believe this is crucial for transparency in the petroleum sector and the fact that resources embedded in the country’s soil and territorial waters are held in trust for the people of Ghana by the President, which entails that they have to be abreast with happenings in the sector.

That is why ACEP’s observation that the petroleum laws are being breached by some oil companies who have failed to develop their oil blocks is of utmost importance. This is because it is in breach of our petroleum laws.

The rationale of the platform is to ensure that contractors do not hold Ghana’s blocks for speculative reasons and that contract transparency is ensured.

New Energy Laboratory system will reduce electricity consumer concerns

A newly inaugurated Energy Laboratory system set up to monitor operations of electric utility companies is expected to reduce consumer complaints by about 50 percent.

According to the Public Utilities Regulatory Commission (PURC), the lab will enable it to improve its monitoring of the quality of service and also assess the integrity of meters used by the regulated electric utilities.

The laboratory is equipped with a state-of-the-art stationary reference meter test bench is designed to test up to five electricity meters simultaneously.

Executive Secretary of the PURC, Mami Dufie Ofori believes that the system will cut down about 50 percent of the complaints, the Commission gets from electricity consumers on metering challenges.

The system, according to the Executive Secretary of the PURC, is more technologically advanced and is swift.

Consumers of electricity power service in the country have long had issues with metering and charges and have long complained that the charges do not reflect the amount of electricity consumed.

PURC is responsible for setting tariffs to ensure competition and international best standards.

Act 538 which set up the PURC stipulates the commission to consult with stakeholders comprising both the utilities and consumers before approving price increases.

The quarterly automatic tariff-adjustment formula introduced by the PURC in 2011, incorporates fluctuations in crude/gas prices, foreign exchange rates, the hydrothermal generation mix and changes in the consumer price index has not been implemented to the letter because the government often interferes in the market price-setting mechanism.

Subsidized tariffs have distorted the current pricing regime to the extent that full cost recovery by the IPPs is near impossible.

Ms. Dufie Ofori stated that even though the previous system has served the Commission for a long time, it, however, lacked some of the capabilities of the reference standard meter test bench—which includes the ability to test meters with higher accuracy limits.

We are hopeful that with the new laboratory system will assuage consumer complaints and provide accurate metering to the satisfaction of all stakeholders. The new laboratory system will help the commission test insulation resistance, high voltage, no-load, meter constant and Meter accuracy among others.

She explained that all these tests are crucial in calculating the bills of consumers to avert the exploitation of ordinary people. Once this new system will ensure improved service delivery for consumers, then we are all for it.

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