Ghana’s oil to be collateralized

Dr. Oteng Adjei, Energy Minister

There are clear indications that the majority in parliament would in the next couple of days use their numbers to effect changes in the petroleum management bill, and open the window to allow government to use the oil money as collateral for loans.

The issue of collateralizing the oil revenue has been a subject of fierce debate, with the minority in parliament advancing arguments which suggest that collateralizing the country’s oil amounted to hedging of a sort, and could spell dire consequences for the country.

They had also suggested that revenue accrued from the oil should be saved for future use. But government had insisted that saving the money accrued from the oil was “nonsense”, considering the fact that the country was faced with infrastructural and other developmental challenges, which needed to be addressed in the immediate future.

According to government, there is an urgent need for massive infrastructural investments, as cocoa farmers cannot get their proceeds to the markets due to bad roads, while the railway sector is also collapsing, coupled with other challenges, such as inadequate health facilities.

A Deputy Minister of information, Okudzeto Ablakwa argued that “Using part of our oil revenue to secure funds for infrastructural development is not in any way a waste of the oil revenue or improper usage.”

Addressing a news conference in Accra yesterday, on the subject of collateralization of the oil, the deputy Minister maintained that amending clause five of the revenue management bill, which bared government from collateralizing Ghana’s oil is premised on government’s consideration of best practices the world over, and based on a philosophy of “development now, rather than perish today and leave the cash behind”.

“We must also stress that the cost of development increases everyday. The more we wait, the more expensive it gets. It will not be the same cost in 10 years from now to construct the same kilometer of road, hospitals and schools, build bridges and overhaul our water and electricity delivery capacity,” Mr Ablakwa reiterated.

Government, however, has been accused of playing the proverbial bird who goes to disturb the waters up north and down south, and comes back to ask who had disturbed the waters.

H e alleged that “The NPP, even before oil production started, had on 8th August 2008, signed a Crude Oil Supply Agreement with Vitol S.A, and even went further to assign all receivables and interest due Ghana under the Petroleum Agreement of July  22nd 2004 and March 10,2006 to BNP Paribas, who were appointed the Security Agents by Vitol S.A.”

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