Deja vu all over again

Troubled Waters

In a few weeks Ghana’s first oil will ship and lately the news coming from Accra has been less than encouraging.  There’s been a lot of talk the past few years about making oil revenues work for the Ghanaian people (with references to avoiding Chad’s problems), but now that the country is moving from talk to action there’s cause for concern.

In this editorial from the Ghanaian Chronicle, the possible use of oil revenues as loan collateral is evoked:

Oil find mired in controversy

Even before the first drum of oil drops out of the Jubilee Fields, red-hot controversy is threatening the welcome news. The ruling National Democratic Congress (NDC) apparently, believes that the oil money could be used as collateral to contract huge loans for “infrastructural development.”
Consequently, the party leadership in Parliament is pushing for an amendment in the Petroleum Management Bill to pave way for the oil money to be used as such.

Vice-President John Mahama, undoubtedly, the most visible face at the Presidency, is pushing hard for the Amendment of Clause Five of the bill, which is now before Parliament, to allow the government use the revenue for raising loans.

Members of the opposition New Patriotic Party (NPP) are against the idea, insisting that allowing the government to use the oil revenue for that purpose would give those in power the freedom to misuse the revenue, and take the country along the route of Nigeria, which is still stuck in poverty, in spite of 2.5 million barrels of the black gold coming out of various oil fields in Ogoni lands every single day.
There is merit in the opposition’s argument. The Chronicle is in favour of infrastructural development. This country has infrastructural deficits all over the place. Our roads are bad, we have no roof over our heads, and our hospitals could do with improvements in quality, in terms of both service delivery and structure. But these deficiencies do not give the right to an administration with a very unreliable service delivery, to play around with the revenue of the black gold.

When Nigeria struck oil, all manner of loans were dangled in the face of officialdom, at the then Government House in Lagos. When the chips were down, most of the revenue was depleted with very little to show. Nigeria is still under a heavy burden of debts arising out of heavy borrowing to fund developments, many of which never got off the drawing board, anyway.

We are not comfortable with the oil money for loans syndrome. It is akin to a person going on a borrowing spree, on the premise that a job promised him would yield revenue enough to pay off the debt. Real life situation does not encourage borrowing ahead of intended revenue. At least, that is what the wise folks would tell you. The oil revenue as collateral for loans would not work. Let us get the gold, and use the resources derived from it for infrastructural and other development. It is sound economics, we believe.

While at it, The Chronicle is asking Mr. Ato Ahwoi, Chairman of the Ghana National Petroleum Corporation, described by Castle sources as the de facto Prime Minister of Ghana, to enlighten the general populace on how many barrels of oil is currently being taken out of the Jubilee fields daily.
The other day, the state-run Daily Graphic mentioned between 20,000 and 80,000 barrels a day. We are of the view that the disparity is rather on the higher side. Between 20,000 and 80,000 is a cool 60,000. While we are not suggesting that someone has deliberately left that huge disparity to create room for maneuvering, it would be in the interest of everybody that the actual figure is known.

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