GNPC urges West African countries to focus on economic diversification

The Ghana National Petroleum Corporation (GNPC) has urged West African countries to focus on economic diversification, which will ensure real growth in other non-oil sectors.

Alexander Kofi-Mensah Mould, acting Chief Executive, GNPC, made these remarks in Accra during the opening ceremony of the first ECOWAS Mining and Petroleum Forum and Exhibition (ECOMOF).

Mould observed that most oil provinces in Africa experience a migration of skilled labour and talent to the oil sector, away from other productive sectors. He said that governments tend to concentrate more on the energy sector in a bid to ‘maximise revenue,’ adding that ‘appreciation of the local currency leads to a reduction in export competitiveness of non-oil sectors.

Citing from BP, 2014 Statistical Review of World Energy, June 2015 Report, he said Africa was endowed with a huge natural gas resource base and that the continent boasted of proved gas reserves of an estimated 7.6 trillion cubic metres in 2014.

He said the ‘oil curse’ (‘Dutch Disease’) in Africa could lead to the overheating of economy, when absorptive capacity limit of the economy is breached; adding that the oil curse tends to widen income gap between the rich and the poor.

Mould said some African countries such as Ghana were championing efforts designed to address the historical oil curse and avert emerging threats by putting in place clear separation of commercial activities from developmental priorities of national oil companies.

He cited the example of Ghana’s establishment of the Petroleum Revenue Management Act and the Petroleum Commission Act, operating within the Ghana Extractive Industry Transparency Initiative (GHEITI) governance framework and the Exploration and Production (E & P) Bill review as examples of such efforts.

The GNPC chief executive also noted that there was also heightened civil society awareness in demand for sector transparency and accountability, adding that side-lining of indigenous communities could present unwelcome local tensions such as the Niger Delta experience.

He said the extractive industry problems were common in the sub-region; adding that the solutions were more effective with strategic collaborations among the various key players such as regulators, national oil companies, policymakers, private companies and local communities.

Examples of arrangements where such regional collaborations came into play include; the West African Gas pipeline, the West Africa Power Pool, the case of Ghana versus the Ivory Coast concerning petroleum resources that straddle regional basins; and negotiation with WAGP on the pipeline tariff.

ECOMOF 2015 on the theme ‘Valourising West Africa’s Mineral and Petroleum Resource through Regional Cooperation’ is West Africa’s only institutionally backed regional mining and petroleum forum, which aims at uniting West Africa’s public and private sector decision makers from both mining and petroleum industries, in one place and at one time.

The two-day conference, which was opened on behalf of President John Dramani Mahama, by Nii Osa Mills, Minister for Lands and Natural Resources; is being organised by the ECOWAS Commission, in collaboration with the GNPC and AME Trade Ltd.