Another Missed Opportunity? Oil, Politics and Inclusive Development in Ghana

Another Missed Opportunity? Oil, Politics and Inclusive Development in Ghana Kojo Asante, University of Manchester

China and the transnational politics of governing natural resources in Africa Giles Mohan, The Open University

DSA Annual conference, 1st November 2014Institute of Education, London

Political settlements and their limits

Political settlements literature is methodologically nationalist and (potentially) repeats the failings of political modernisation theory

We ask:•How does the type of political settlement and its dynamics in Ghana shape the governance of oil, and how has/will oil reshape the political settlement? (KA)•How do different ideas about development shape the use of oil and what impact does oil have on the political imaginaries of key actors? (KA)•What are the transnational dynamics involved here, and to what extent do these impinge on and national-local dynamics? (GM)•What are the implications for inclusive development? (GM)

Ghana’s pre-oil political settlement

• A dominant executive • De facto two-party system • Inter- and intra- elite competition

• Strained relations between party elites and lower ranks

• Pervasive clientelism

• Citizens treated as both ‘citizens’ and ‘clients’• Short termist relations with domestic business • Weak institutions despite a few islands of effectiveness

• A fragile idea of the state as the embodiment of national aspirations

Ownership of Ghana’s Oil fields

COMPANY NAME ORIGIN OF PARENT

COMPANY

No. OF AGREEMENTS

1. Kosmos Energy Ghana HC USA 2

2. Tullow Oil Ghana Limited Ireland 3

3. Vitol Upstream Ghana Limited (formerly Heliconia Energy Ghana Limited)

Netherlands 2

4. Hess Ghana Limited (formerly Amerada Hess)

USA 1

5. Vanco Ghana Ltd. USA 1

6. Aker ASA Norway 1

7. Gasop Oil (Ghana) Limited Nigeria 1

8. Saltpond Offshore Producing Company Limited

Ghana with USA majority

1

9. Oranto Petroleum International Limited

Nigeria 1

10. Afren Energy Ghana Ltd Britain 1

11. Sabre Oil & Gas Ltd Scotland 2

12. Luk Oil Overseas Gh Ltd Russia 1

13. Anadarko USA 2

The Jubilee Field

Ghana’s oil governance

Key agencies: •GNPC – established in 1983 – dual role of regulator and producer•Petroleum Commission – established in 2011 to take over GNPC’s regulatory role•Ministry of Energy – sets policy and closely linked to President•Ministry of Finance – forecasts and collects revenue•Parliament – Constitutionally mandated to vet and approve contracts•PIAC – civil society scrutineer

The post-oil political settlement (PS+)

Continuity:•A dominant executive •De facto two-party system •Inter- and intra- elite competition

•Pervasive clientelism……The E.O. Group/Kosmos debacle and the Zoomlion/AGM Contract

GNPC - ‘Pocket of effectiveness’ or ‘parallel government’?

• Since formation has been close to President• GNPC is repository of expertise which gives it power• Stakes raised once offshore oil found• Split between GNPC and PC, though GNPC retains de facto

control• Expanding commercial operations

Weak oversight – PIAC and Parliament

• Internationally supported CS ‘Platform’ was successful in shaping PRMA

• (Transnational) epistemic communities important• PIAC undermined by Parliament, but just about

functions• Partisan politics undermine Parliament

Changes in the post-oil political settlement (‘PS+’)

•Fragile coalitions with differences between parties•Different approaches to consultation•Sub-national claims•NDC more open to ‘South-South’ relations….the case of China

Gas

China comes knocking

“The worse the institutions are in the host country, the greater Chinese investment is attracted to natural resources” (Kolstad and Wiig (2012: 32)

“to create goodwill in preparation for possible future Chinese NOC business opportunities” (Moreira2013: 156)

China, oil and African politics

“China has emerged as a significant source of credit to Africa, traditionally our partners have been the World Bank and IMF…The process of accessing World Bank and IMF credit has been unfortunately quite tiresome and comes with a lot of strings…we find it easier to go to the BRIC countries”

China’s appeal

The MFA goes sour

• Building macroeconomic crisis - IMF bailout (September 2014) but ‘not a SAP’

• Stalling of Tranche 1 of $1.5 billion. Only 2 of the 12 projects commissioned

• Dispute over repayment oil price

PRMA and inclusive development

• Misallocation of oil revenues• Local content politicised, but new law in place

Discussion and conclusion

Legitimacy and inclusion• Cements but does not transform patrimonialism• Islands of effectiveness in an otherwise weak state• Civil society becoming fragmented

Effective development for the few• Sub-national tensions emerging• Oil workers beginning to protest• Local content is weak

Political causality still opaque• Power still with international capital