Oil-rich countries under the Extractive Industries Transparency Initiative (EITI) will have to come bare on ‘genuine’ owners of oil, gas and mining companies by the end of 2016.
This is because of what is known as ‘beneficial ownership’, the new requirement to the international governing standards for countries with extractive industries.
EITI seeks to assist countries with extractive minerals to uphold best practices so to avoid what has become known as the ‘oil-curse’ in most oil discovering countries.
Ghana joined the Extractive Industries Transparency Initiative in 2012 and therefore must comply with all requirements.
Benefits to countries
EITI requirement preaches transparency and good governance among participating countries.
Marie Lintzer believes this will tackle corruption in countries.
“It is a very important thing. It will suddenly shed light on how companies’ structures are made in the country and expose some political officials who might be behind deals that may be disclosed”. She said.
Francis Wajah, a Takoradi-based journalist is optimistic of the benefits if the beneficial ownership requirements are adhered by government.
“It excites me because the more transparent I know that the resources of the country are being managed, the more happy I am.”
As a journalist, he can easily track who is contributing what to avoid any conflict of interest situation.
The conducive and serene business atmosphere in a country is often the driver of investors.
Dr. Anthony Paul, the Principal Consultant at Association of Caribbean Energy Specialists limited, believes it (EITI) has the potential to increase investment if Ghana complies.
“EITI’s call affects your investment climate; the risk people put on your country is reduced”. He explained.
According to him, the requirement will not just get the country high marks but the question is what happens after that.
Not ascribing to an international body such as EITI requirements, he believes, “it takes away the attractiveness and tag as an investment destination”.
In an interview with Seth Twum-Akwaboah, the Chief Executive of the Association of Ghana Industries (AGI), he explained Ghana is losing the shine as the gate-way to West Africa.
This according to him is because the business environment (increase corruption, frequent power cuts etc) is compelling local businesses to be non-competitive.
“In the international oil business circles, transparency and accountability is key to boost the local industries,” he said.
Why Ghana might not comply
The ‘beneficial ownership’, requirement will encourage participating countries but not mandate them, failure to provide the information would be documented, but would not be a cause for non-compliance.
This is according to the EITI beneficial ownership pilot evaluation report issued October, 6, 2015.
Many experts are worried this gives space to developing countries to avoid it compliance.
Again, it does not met out stringent sanctions to countries that do not comply to its requirements apart from suspension.
This means, participating countries can choose to comply or not.
For two year (2012 to 2014), the EITI piloted the new requirement in some selected participating countries but the result is not enticing.
At the end, many of the reports published provided limited information when collecting the data, making it impossible to ascertain whether all companies complied with the disclosure requirement.
Democratic Republic of Congo 2013 report for instance showed that out of 16 countries, only one disclosed beneficial owners.
Nigeria’s 2012 report also showed none out of 41 oil and gas countries was disclosed.
Senior lecturer of the Petroleum Engineering Department at KNUST, Dr. Stephen Donyinah is therefore concerned with whether Ghana can be honest adhering to the new requirement.
“It is a laudable idea but I have misgivings about this, I don’t think there will be honesty in the disclosure”. He explained.
“Many people in high positions will be involved and they won’t like to be disclosed so most people with the expertise could be used to front”. Dr. Donyinah revealed.
The African Centre for Energy Policy and ISODEC are two civil society groups that have raised eyebrows severally on certain decisions in the extractive sector.
They have shared a common assertion that the EITI requirement is not a basis to determine a country’s compliance or not.
Did you know that there about 402 registered oil and gas companies in Ghana?
“We have awarded more contracts than the jubilee field, who are those and why did the EITI report not disclose that,” Executive director of ACEP, Dr. Mohammed Amin Adams quizzed in an interview with Luv Biz at an oil and gas workshop in Accra.
The way forward
In South Sudan, it is a requirement for oil companies to name real owners of oil companies before a company can be awarded oil contracts.
This is to avoid a situation where politicians will register their companies in secrecy and bring them back to be awarded oil contracts.
Dr. Mohammed Amin Adams prescribes the institution of a national law or policy instrument to ensure beneficial ownership is mandatory and disclosed.
“So that we know that some of our people are not taking advantage of our oil resources to benefit and deepen their vested interest at the expense of the rest of the Ghanaian”
Dr. Donyinah quizzed, “do they have detective means to identify independently who the true owners are?.
He is convinced this could be successful if such measures are in place.
As at present, it seems appropriate that the EITI Standard should mandate its participating countries to agree a definition of beneficial ownership that suits local circumstances.
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