It will soon be mandatory for all international, national and local companies operating in the extractive industries in Ghana to report on their earnings whether they have signed on to the Extractive Industries Transparency Initiative or not due to a legislative instrument in the offing.
Ghana would be the third country in Africa to pass such a law specifically targeted at entrenching and institutionalizing the principles of the Extractive Industries Transparency Initiative.
Currently, Nigeria and Liberia are the only countries in Africa who have successfully done so.
According to Franklin Ferdinand Ashiadey, National Coordinator of the Ghana Extractive Industries Initiative, “hopefully by the end of this year the Ghana EITI Bill should be passed into law”. The bill is currently on its way to the Attorney General’s Department for advice.
He explained that the Ghana EITI Bill is to address some of the numerous challenges that the country had faced over the years in implementing the EITI.
To ensure the sustainability of the Ghana EITI and ease the challenges of accessing receipts and payments data and other critical information from extractive companies and government agencies, stakeholders have called for the need to back the EITI with legislation.
The bill is expected to complement other existing legislations which aim at ensuring transparency and accountability in the natural resources sector of the country.
Mr Ashiadey dispelled the notion that with the passage of the Petroleum Management Act, Act 815, there is no need for the Ghana EITI Bill, indicating that “the two laws complement each other. The principles of EITI have no doubt informed the drafting of the Petroleum Revenue Management Act, 2011 (Act 815) which has transparency very entrenched in it.
Moreover, in consonance with developing trends on the issues of extractive industry transparency, the draft bill seeks to expand the scope of the current EITI to cover the entire natural resources sector (minerals, petroleum, forestry and fisheries).
The bill is also intended to ensure increased transparency in the distribution of payments made to, and received by District Assemblies and traditional authorities.
Some of the oil and gas companies operating in Ghana include Tullow Oil, Kosmos Energy, Hess Corp, Vanco, Eni, Lukeoil, Anadarko and Sabre. Those in the mining sector also include Alcoa, Anglo American, Gold Fields, Newmont, Aluminia Ltd, Iamgold, Metorex Ltd, Mwana Africa plc, Red Back Mining Inc, Crew Gold and Metorex Ltd.
The mining industry in Ghana is dominated by gold, diamond, bauxite, and manganese.
The EITI is a multi-stakeholder coalition of governments, companies, investors, civil society organizations, and partner organizations. The EITI, in a nutshell, is a globally developed standard that promotes revenue transparency at the local level. It is aimed at ensuring that resource-rich countries fully benefit from the extraction of their natural resources.
The Minister of Finance and Economic Planning has underscored the importance of the EITI legislation and government’s commitment to the EITI legislative process. He noted that while the EITI can deliver many benefits as a stand-alone initiative, it is likely to work particularly better when there is a long term strategy for mainstreaming it to improve governance of extractive industries. This mainstreaming can be achieved through a well thought out law backing the initiative that also addresses some of the implementation challenges.
He emphasized that the issue of the EITI legislation is even more urgent now than ever before as the country roll-out EITI to the oil and gas sector. He noted that the value the EITI can add to the governance of Ghana’s natural resources sector can be enhanced if its fundamental role of publishing or putting accurate information in the public domain is done regularly and timely. “In fact we expect timely and accurate information to enable us addresses systematic problems on time” he pointed out. The regular publication of timely, reliable and easily accessible financial information disclosed by governments and companies and subject to third party verification is at the core of the EITI model of improving natural resources governance.
The bill also provides for contract transparency by making provisions for the disclosure of the contents of extractive industry contracts negotiated and concluded between companies and firms within the sector and government to the public. Contract transparency is essential not only for the purpose of tracking revenue streams but also for ensuring the sustainable exploitation of natural resources.
Ghana signed on to this EITI Initiative in 2003 and has since applied it to the mining sector. Upon the discovery of oil in commercial quantities in 2007, the EITI was extended to cover the oil and gas sector in September, 2010.
The Ghana EITI Bill legislative process started as far back as August 2007 when a workshop was organized for the Parliament Select Committee on Mines and Energy to discuss the backing of the Ghana EITI process by law in order to institutionalize the process and make disclosure of financial information compulsory for both mining companies and government. The Parliamentary Select Committee recommended a legal review of Ghana’s laws, especially those relating to revenue management, transparency and accountability in the context of the extractive industries.
In January 2008, a law firm, Reindorf Chambers, led by Mr Fui Tsikata was engaged to undertake the review of Ghana’s Laws that promotes or hinders transparency and accountability. The report presented by Reindorf Chambers was further reviewed by ISODEC Group of legal experts with a conclusion in support of EITI legislation. To reconcile the two legal positions on the EITI legislation, in January 2010, a stakeholder consultative workshop was held to determine the way forward.
To move the process forward towards the EITI legislation, in January 2011, the Ghana EITI National Steering Committee with the support of the Ministry of Finance and Economic Planning and German International Corporation (GIZ), engaged the services of a team of Legal Consultants to provide a draft Ghana Extractive Industries Transparency (GHEITI) Bill. The assignment has since been completed and submitted to the Ministry of Finance and Economic Planning.
On the 13th July, 2012, the Ghana EITI Secretariat and the Ministry of Finance and Economic Planning organized a breakfast meeting to sensitize the Parliamentary Select Committee on Mines and Energy and some selected Cabinet Ministers on the draft bill to get their buy-in.
So far there are 36 EITI countries with 21 being EITI Candidate countries, 14 EITI Compliance countries and 1 suspended.
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