First oil bid & licensing: Ghana rated weak on direct negotiation

The country amongst other benchmarks scored 55 percent on direct negotiation index which is considered weak by on the score board.

The Civil Society Licensing Round Monitoring scored Ghana 70 percent on the entire process cumulatively scored 70 percent which is interpreted as Satisfactory on the adopted grading scheme.

Thematic areas that were rated as good were adherence to procedural requirements under competitive bidding and the compliance with the calendar of events under the licensing round.

Ghana’s first oil bid and licensing round was launched in October 2018. This was in line with the Petroleum Act, 2016, (Act 919).

Six blocks were made available for the licensing round; three blocks to be awarded through an open and competitive bidding process, two through direct negotiations and one to be solely operated by Ghana National Petroleum Corporation (GNPC), the national oil company.

Bid and licensing rounds are now a global norm for resource-rich countries in selecting investors for upstream petroleum activities.

Importantly, quality of data and fiscal terms count in sustaining investor interest beyond the initial expression of interest, the Monitoring Group said.

In the case of Ghana, out of 60 applications received from 16 companies, only three companies progressed to submit bids after prequalification.

The report states that, while the licensing process was ongoing (competitive tendering and direct negotiation), the Ministry of Energy opened an escape window for companies to negotiate outside the licensing round process. “This has the effect of undermining the competitiveness of the process,” It cautioned.

Although the selection process met the timelines set by the Ministry, the actual negotiations of petroleum agreements are yet to be concluded five months after the deadline.

This, the Monitoring Group indicates could portend corruption risks and negatively impact on future investor interest.