Date: August 5, 2011, 4:58 pm


THE EO GROUP SAGA SPELLS THE IMPERATIVE FOR A NATIONAL CONSENSUS...


THE EO GROUP SAGA SPELLS THE IMPERATIVE FOR A NATIONAL CONSENSUS ON HOW TO PROMOTE LOCAL PARTICIPATION IN GHANA’S OIL

 

 

Mr. Chairman,

Ladies and Gentlemen of the Press,

Good Morning.

 

We have invited you here to share with you some developments in Ghana’s emerging oil and gas industry which give cause for concern and which require a national consensus in addressing them.

 

These developments, ladies and gentlemen, relate to the striking of shady deals and carving out of interests in oil acreages for party cronies all in the name of local content.

 

First, the NPP is accused of instigating and facilitating the acquisition of a 3.5% stake in Kosmos Energy held in the name of Bawuah Adusei and one George Owusu under circumstances that provoked investigations by the NDC government into the affair upon assumption of office. 

 

Unconfirmed reports, ironically, say the NDC has also carved out a 2% interest in AFREN’s 70% stake in a recent acreage assignment, held in the name of one Joe Ofori, who we are informed has been armed twisted to relinquish the interest to a third party because he is suspected to have some sympathies for NPP.

 

Another issue of concern relates to the oil contract of New York-based HESS Petroleum. Just like the EO Group, HESS Petroleum under unexplained circumstances managed to obtain a lower royalty rate of 4% as opposed to 5% granted the Jubilee partners.

 

Ladies and gentlemen, recent reports in the media on the sale of EO Group’s 1.75% stake in Jubilee to Tullow Oil clearly indicate that government is in disarray over the deal. Government appears divided on how to deal with the EO Group and whether or not to ratify the transaction. Deep-throat sources say the A-G insists that government should not consent to the sale because there is a prima facie case for prosecuting officials of the E.O. Group for fraudulently acquiring the stake in the Jubilee project. Legal opinion on the matter say allowing the sale will erase key evidence needed for prosecution.

 

However the Energy Minister appears steeped in his conviction that getting the EO Group to pay reparation is the way to go. He has in fact publicly stated that government has consented for Tullow Oil to enter into negotiations with the EO Group for an eventual takeover of EO’s shares, an endorsement which we understand was authorised by the President.

 

Ladies and Gentlemen, ISODEC views the turn of events on the EO Group as very surprising and disturbing, given that, for the past two years government has repeatedly assured Ghanaians of justice in this matter. We have considered this issue and others as test cases that will show us the way in dealing with local interest in our petroleum resources but the turn of events as I speak, do not offer good signs. It is becoming clear that the government’s sudden change of mind on the prosecution of EO Group has everything to do with political shielding, which runs contrary to the spirit of transparency and angelic honesty which have become the mantra of the Mills administration.

 

Ladies and Gentlemen,

 

The charges, proffered against the EO Group are several, (about 25) as reported by the New Crusading Guide, and include; “causing financial loss of several billions of dollars to the state, money laundering and conspiracy to forge official documents among others”. These, you will agree, are serious charges that cannot be swept under the carpet for whatsoever reasons. As you all know by now, the government has ratified the sale of the EO Group’s stake to Tullow, but this ratification is being contested from within. Media and other reports have it that, the sale of the 1.75% stake amounts to $305 million and the Energy Minister’s alleged reparation deal with the EO Group is in the range of $3-$15million. The Energy Minister has issued a press release to the effect that the ratification of the transaction does not in any way indemnify the Group.  Incontrovertible evidence we have gathered however, points to the contrary.

 

The issues here are, what reasons influenced the government to resort to the alleged reparations rather than pursuing justice?  Could it be, as some people argue, that if government was able to drop all charges against Kosmos (a foreign company) regarding the breach of data protocols, why not do the same for the EO Group, a local company? A further question is: at what cost, and would that not be an entrenchment of a bad precedent?

 

Ladies and Gentlemen, for the avoidance of doubt, we wish to state categorically that the local content explanation for this creeping tendency to cut deals for cronies is unacceptable. Indeed we suspect some other political collusion which has all the ingredients of short-changing Ghanaians of their oil wealth. Why do we say this? We say this because the events running-up to the EO Group’s reparation deal lack in transparency and truthfulness, considering that the President, according to our information, may have endorsed the deal without consulting the Attorney General. What is also worrying is the indecent unilateral haste pursued by the Minister of Energy to push the deal through without due process.

 

Ladies and Gentlemen,

ISODEC believes that any act which does not consider adequate steps to ensure that the state does not lose money knowingly or unknowingly is tantamount to “causing financial loss” to the state.

 

The repercussions of this deal will not manifest only in financial terms but also has many other ramifications for the governance of our petroleum resources:

 

  1. The national cost is that we are defining and entrenching the precedence for political cronyism and opacity in the oil and gas industry as in “I scratch your back, you scratch mine”
  2. Allowed to stand, the reparation deal will encourage impunity in the country’s body politic;
  3. The worst fears expressed by the Oil and Gas Platform and other CSOs concerning the too many discretionary powers of the Minister for Energy as in most of the oil and gas sector bills have been confirmed too soon.

 

Ladies and Gentlemen,

 

The EO Group saga and other agreements have become test cases as to whether we are really prepared as a nation to beat the much talk about “resource curse.” Several fora have consistently bemoaned and rejected our past experiences and that of the sub-region in natural resource exploitation. But from all indications, we are not yet out of the doldrums of mismanagement of the country’s fortunes.

 

We can recall numerous assurances from the President and the Minister for Energy that Ghana’s petroleum resources will be governed with utmost transparency, honesty and integrity. But we are unenthused because there are a plethora of other cases that may not necessarily be in the public domain but have all become the creeping monsters threatening our oil resources. For instance as regards the Kosmos alleged breach of data protocol and the mud-spillage, government explained that it had reached an amicable settlement with Kosmos, the terms of which were not disclosed to Ghanaians. In addition there was a waver on the fine on the spillage which meant that Kosmos was exonerated of all criminal charges without Ghanaians having the slightest idea of the basis.

 

Ladies and Gentlemen,

I must admit that it is not palatable to appear to be vilifying a local company, when actually what we need at this time is increased local participation in the oil and gas industry. However, the issue here is not just about the EO Group but also about the precedence being set, opening up excuses for shady deals. We believe government should support local companies irrespective of their political affiliation or creed, but not in a manner that runs contrary to internationally established norms and best practices. It is in this light that we need a national consensus on how every Ghanaian business or individual irrespective of their political colouration could be afforded the opportunity to acquire interests in oil acreages in Ghana.

 

Thank you for your attention.

 



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