Oil is essential for global development, including Ghana. But the oil industry is characterized by uncertainty in terms of pricing and environmental challenges that have negative implications for sustainable develop.
Is the current petroleum industry in Ghana sustainable?
Sustainable development is development that meets both the needs of the present and future generation. When we talk of development, it entails economic, social, political and environment improvement in the living condition of people, society, or nation. Indeed, since Ghana started oil production in 2010, the country has made significant economic gains from oil, approaching almost a billion dollars per year. But these monies have not translated into any meaningful improvement in the living conditions. Also, oil prices have fluctuated over the period thereby affecting how much revenue the state get from the sector. Ghana cannot continue depend on a resource which prices the country does not control and controlled by transnational companies. The oil industry is also interfering in the fishing near the oil rigs as fisher-folks are restricted from fishing is certain areas of the sea. The tension between fisher-folks and oil companies if not address can lead to violent conflicts in the future. There are environmental challenges with the oil industry where fisher-folks complained that fishes are dying because of chemicals from the oil pollution.
What are the main policies adopted by the government in the petroleum industry?
Two main policies are driving the Ghana oil industry. First, local participation in the oil and gas through local content laws that stipulate that transnational companies must partner Ghana, through the Ghana National Petroleum Company (GNPC) in the exploration and development of the oil industry. This is to ensure building the technical capacity of the GNPC to become the lead operator in the oil and gas industry in Ghana. Also, part of the local content policy/law stipulate that Ghanaians must be employed in the oil industry as much as possible or where the technical capabilities are not available now, they should be trained. Second, there is a petroleum revenue management law that ensure transparency in how oil revenues are spent. The parliament of Ghana outline how the revenues are spent on specific sectors based on best practices in other spaces. Also, there a future generation fund where some of the oil revenues are invested for the yet unborn generation.
What policies do companies investing in the oil industry in Ghana have?
Companies are supposed to apply the best environmental practices as pertain globally. They are also supposed to transfer technologies and skills to the Ghanaians over the long term. Also, they are supposed to obey the Extractive Industries Transparency Initiatives (EITI) and Publish What You Pay (PWYP) which are supposed to ensure transparent and mitigate corruption in the oil industry.
What problems do you think the sustainable development of Ghana's petroleum industry will encounter?
Do you have any suggestion? Sustainable development challenges Ghana will suffer is the oil reserves will run out very soon and if the country does not look for renewable energy resources, it will loss revenue. Also, for over the ten years, local capacities are not built enough so the foreign companies still control the industry. Ghana does not have the financial and technical capabilities to engage in exploration by itself. There is also inefficient use of the oil revenues to transform the structure of the Ghanaian economy. Most of the revenue is spent on consumption and spent thinly over several projects which are not completed on time. Restrictions of fishing near the oil rigs is negatively impacting the activities of fisher-folks in the Western Region of Ghana. Fisher-folks are losing livelihoods and this over the long term can degenerate into conflicts.
There is the need to build local capacity for Ghanaians to take over the industry over the long term. We must treat oil revenue as a special money and invest into limited but important sector to have the need impact on Ghana. The country must check corruption in the sector. And finally, since oil is non-renewable, there is the need to start investing some of the oil resources into renewable energies to ensure when oil finishes, Ghana can fall on those resources for development.
Editor Assistant Research Fellow: Xianglin Gu