Socio-Environmental Impacts of Extractives Industry in Ghana

=Oil and Gas=

A major impact of hydrocarbon extraction is on the marine environment – offshore exploration and production can generate large amounts of hazardous waste material such as drilling mud and cuttings, drilling fluids, deck drainage, well treatment fluids and oil spills. Atmospheric and noise pollution also arise from rig operations, the construction of tank farms and vehicular emissions – impacting negatively on environmental quality.

The Pulitzer Center on Crisis Reporting raised concerns over an oil spill from the Jubilee Field in November 2011. They claimed no official clean-up operation had been undertaken, and that fishing communities and coastal tourism had been adversely affected. They cite Ghana’s extractive industries as having a ‘regulatory vacuum’, indeed as of the start of 2012, the government acknowledges that it has no compensation fund to support fishing communities in the event of a major oil spill or disaster. In response to these accusations, Tullow Oil argue that they keep clean-up equipment on-site and that they are a member of the industry-funded Oil Spill Response Ltd., an organisation that can airlift equipment from the U.K. within 24 hours of a major spill.

Mary-Jean Moyo of the International Finance Corporation (IFC) – the private sector investment arm of the World Bank, said the Jubilee project was classified as low risk for Ghana because “this is offshore and there weren’t any onshore impacts in terms of social displacement, in terms of destruction to mangroves.” However, the environmental assessment performed by the IFC was ‘inadequate’ and failed to comply with international standards according to Pacific Environment, an environmental organisation. They claim that it did not take into account the impact of drilling and waste on endangered species and critical habitats. Whilst Jubilee Field production started in 2010, the Ghanaian government has yet to update its environmental laws governing extractive industries. Current legislation therefore was not designed with the oil and gas sector in mind; Ghanaian officials said new legislation will be considered in 2012.

A separate Pulitzer Center report suggests that that social impact of the oil and gas industries is likely to be felt by fishing communities, as fishing is now restricted by an exclusion zone surrounding rigs. This restriction of fishing rights will negatively impact on the livelihoods of fishing communities, and the report indicates that fishermen have complained about reduced fishing stocks since fish are attracted to the lights of the rig. Moreover, marine pollution and increase shipping traffic is likely to degrade the quality of fish stocks and it is possible that nets will be damaged on offshore installations.

It has also been suggested by commentators, such as Bloomberg, that the discovery of oil has driven a north-south socio-economic divide in Ghana. The presence of offshore oil and gas in the south, combined with gold reserves and cocoa plantations have resulted in economic development accelerating in southern regions, whilst the north lags behind. Internal migration is continuing to drive this economic imbalance, and is creating political tension.

The Jubilee Field’s has an estimated 600 million - 1.8 billion barrels of oil Based on a long run price assumption the World Bank predicts potential government revenues of at US$1.0 billion on average per year between 2011 and 2029. They argue that whilst short term economic benefits are clear, and government revenues should allow for developmental gains in the coming years, the effective long term exploitation of the oil discovery will rely on the recognition that letting indiviudals use such funds in a discretionary fashion would be harmful to the country.

=Mining=

In 2001, a report as part of the Structural Adjustment Participatory Review Initative (SAPRI - a global project designed to consult civil society on economic policy) argued that despite the resurgence of the Ghanaian mining sector since 1989, there is growing concern within mining communities that they are not seeing a net benefit. The ongoing tensions between mining communities and mining companies reflects the disquiet about the negative impacts of mining on society. A clear case in point is AngloGold Ashanti, a multi-national mining company operating in Ghana on gold reserves in Obuasi and Iduapriem. It was named by Greenpeace in 2011 as the ‘world’s most irresponsible company’, citing multiple cases of serious social and environmental damage. The company was accused of contaminating drinking water sources with mining waste, as well as torturing and killing local miners who trespassed on the company’s concession.

Artisanal and small-scale mining (ASM) in Ghana also brings unwanted environmental consequences – namely mercury contamination and land degradation. A lack of regulation (around 75 percent of the ASM sector operates illegally) makes these problems difficult for the Environment Protection Agency (EPA) to address.

The African Trade Policy Centre (ATPC) argue that as a result of generous fiscal incentives, the mining sector does not maximise the level of government revenue it might raise. . They report that, on average the mining sector contributed about 12.1 percent of government revenue from 1990 to 2004 in Ghana. Guarantees placed on mineral licences for tax incentives, low royalty rates and low mineral duties were intended to create a favourable investment environment, yet the ATPC argues that these have been provided at the expense of Ghanaian government’s capacity to raise revenue and have therefore hampered development.

=Environmental and Protection Agency (EPA)=

The primary institution in Ghana responsible for regulating the environment and implementing the Government’s environmental policies is the EPA. It is guided by the legal and regulatory mechanisms of the Environmental Protection Agency Act 1994 and the Environmental Assessment Regulations 1999. The 1994 Act requires the EPA to issue environmental permits and pollution abatement notices, prescribe environment standards, develop a comprehensive database on the environment, co-ordinate with relevant institutions and monitor compliance. Under the Environmental Assessment Regulations, 1999, an environmental impact assessment (EIA) is required for all new undertakings; for example with oil, gas and mining exploration, a permit must be issued prior to commencement.

=References=