Ghana Petroleum Regulatory Authority Bill

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The Ghana Petroleum Regulatory Authority Bill of 2008 proposes the formation of a regulatory authority to regulate, oversee and monitor activities in Ghana's petroleum industry, covering upstream, midstream and downstream petroleum operations.[1]

The World Bank in early 2012 approved a $100 million grant for Ghana to build a facility that will help house the proposed regulatory authority.[2] Ghana's Cabinet approved the draft bill by June 2010,[3] and as of February 2012 Parliament had not approved it and the bill had not yet passed.

Features of the draft law

In the draft bill, the proposed Ghana Petroleum Regulatory Authority (GPRA) is to enable increased private sector participation and investment, promote a vendor development program to enhance national participation in the supply chain process, and strengthen the regulatory framework for healthy competition in Ghana's petroleum sector. The GPRA is also to initiate, negotiate and administer petroleum agreements and assess appraisal programs, field development plans, tail‐end production and the decommissioning of petroleum fields and facilities for approval.[1]

The bill also seeks to decouple the Ghana National Petroleum Corporation (GNPC)'s role as both the petroleum industry's major player and its regulator,[4] defining it as a strictly commercial entity, partially defines the petroleum industry's fiscal regime, and seeks to establish disclosure and confidentiality rules for the sector.[5]

Regulation of upstream, midstream and downstream operations

Upstream

Within the upstream industry, defined in the bill to include exploration, development and production of petroleum,[4] the bill seeks a framework for inter-agency cooperation between the GPRA and relevant agencies such as the Environmental Protection Agency and the Ghana Maritime Authority (GMA), to see that health, safety and environmental standards in oil and gas operations are met. Under the bill, the GPRA is mandated to work with the GMA in approval for plans to build sub-sea petroleum pipelines and the allocation of safety zones.[1]

Midstream

In the midstream sector, defined to include petroleum activities between the well-head and refinery, namely petroleum transportation and storage,[4] the bill seeks to establish a scheme to govern licensing to install and operate petroleum storage facilities, granting the GPRA the authority to grant licenses on specified conditions. The bill calls for a tariff on petroleum transportation via pipeline, and for the government to be fully involved in setting these tariff rates, which are to be set at a level at which the pipeline company will cover the costs of constructing, financing, operating and maintaining the export pipeline while still making a reasonable return. Transportation of petroleum by any means other than pipeline must be done with the license of the GPRA.[1]

Downstream

The bill mandates that persons or entities must obtain licenses before engaging in any downstream activities, which include importation, exportation, re‐exportation, shipment, transportation, processing, refining, storage, distribution, marketing and sale of any crude oil or refined petroleum products. Further, service providers in the downstream industry must submit a monthly report that indicate imports, production, domestic sale and consumption, inventory of crude oil and products and exports. The bill also promotes fair trade practices in the downstream industry.[1]

Fiscal regime for commercial petroleum discoveries

The bill also establishes the fiscal packages agreed upon in the event of a petroleum discovery as follows:

  • Royalties in respect of oil and gas of 12.5 percent and 7.5 percent, respectively
  • Ghana National Petroleum Corporation (GNPC) receiving 10 percent carried interest
  • GNPC receiving additional interest (subject to reimbursement of GNPC to contractor for its share on its participating interest) of 10 percent
  • Corporate Income Tax of 35 percent[4]

External Links

Ghana Petroleum Regulatory Authority Bill

References

  1. 1.0 1.1 1.2 1.3 1.4 "CONSOLIDATED REPORT ON PROPOSED PETROLEUM BILLS AND LOCAL CONTENT POLICY FOR THE PETROLEUM SECTOR" Faculty of Law, University of Ghana, September 2010.
  2. "World Bank approves 100 million dollars for Ghana" Joy Online, 1 February 2010.
  3. "Ghana Receives Second Tranche of Economic Governance and Poverty Reduction Credit" Ministry of Finance and Economic Planning, Retrieved 15 February 2012.
  4. 4.0 4.1 4.2 4.3 "Oil & Gas" Corporate Africa, Retrieved 15 February 2012.
  5. "New Producers and the Challenges of Transparency: The Case of Ghana" Johns Hopkins University, April 2009.