Ghana: Disquiet In The Oil City - African Business Magazine
Close
Ghana: Disquiet In The Oil City

Ghana: Disquiet In The Oil City

The discovery of oil has transformed Ghana’s twin city, Sekondi-Takoradi, a once-quiet fishing port, into a booming metropolis. In the past three years, the population has doubled and numerous upscale businesses are opening their doors. But all is not well in this ‘oil city’.

Sitting in his battered wooden canoe, Papa Swabeng tries to mend his net before the dark clouds forming over the harbour bring in one of the region’s remarkable storms, characteristic of the rainy season. He sings a traditional Akan song – to ward off bad spirits –while behind him children run up and down the beach kicking a soccer ball in their bare feet.

But less than 60 km off the coast of Ghana’s Western Region, the picturesque scene of the small fishing village contrasts with the country’s transition into a modern oil-producing state.

“I have never been arrested, but my friends come home with stories of them being chased,” Swabeng tells my translator in Fante, the local Akan dialect. I had come to the Shama harbour where Swabeng anchors his boats to interview the chief fisherman about arrests being made for fishing too close to a mile-radius no-go zone around a new offshore rig – Ocean Rig Olympia is the fourth rig in the region, and the first off the coast of Shama, but Swabeng impatiently approaches my translator. He needs to talk to me, he says, about oil.

“We were told not to get close to it. When we asked why, they said, ‘If you do get close to it, your nets will get entangled with something underneath the rig and it will capsize your canoe.’ We don’t intentionally go there, but the current of the waves push our canoes closer to the rig.” Swabeng tells us he’s afraid he’s risking his life whenever he goes out into the water. Ghana’s fishing industry was already facing its share of problems when the West African country joined the league of oil-producing nations in December last year.

Fish populations have been on the steady decline for the past decade, a result of overfishing, but the discovery of oil presents an entirely different threat. Although his family has fished here for as long as he can remember, Swabeng fears for the traditional way of life for generations of Ghanaian fishermen.

Kosmos Energy, a private oil company based out of Texas, was recently fined $35m for three separate oil spillages. Earlier this year, heavy waste oil from increased vessel traffic covered the beaches of Axim, a nearby resort community. Swabeng and the other fishermen of Shama are anxious about an oil spill in their shores. “If there is a mistake and there is a spillage, the fish will run backwards,” he says, explaining the fish will swim back into deep water where he cannot go with his small canoe. “If they run backwards, we are not going to get any fish and that will affect our livelihoods.”

Swabeng’s fears are shared by the region’s chiefs. “Oil spillages and seepages are characteristic of the industry,” says Paramount Chief of Western Nzema, Awulae Annor Adjeye III, echoing the concerns of the country’s fishermen. Adjeye has been a vocal figure about the environmental impacts of offshore drilling since the region discovered the valuable resource in 2007.

He says the oil spill that occurred in Axim was the rule, not the exception. That’s part of the reason he and other Western Region chiefs are calling for 10% of the oil revenue to go back to the region itself – a petition that has so far fallen on deaf ears.

“Western Region is now the breadbasket for the whole country,” says the chief. “Western Region is now like America. Every tribe is here – and not only Ghanaians, but outsiders. What is being done to improve the infrastructure of the area is going to affect everybody.”

Flood of ‘migrants’

A major producer of gold, diamonds, bauxite, and timber, Ghana’s Western Region is now pumping out over 100,000 barrels of crude oil a day from its offshore rigs. Crude oil exports are expected to generate $1bn a year for the next 20 years.

However, in the rundown port of Takoradi, the regional capital, the discovery of oil has been met with mixed emotions. While many new businesses are opening their doors to the influx of people, especially foreigners, many people are suffering from the rising cost of living associated with the oil boom.

“There was already a lack of residential facilities in Sekondi-Takoradi and then the oil boom comes and people want to take residency here and they don’t have it,” says the Metropolis Chief Executive, Retired Captain Anthony Cudjoe.

In the past three years, the population of the formerly quiet fishing port has nearly doubled from 350,000 to approximately half a million residents, exasperating the city’s struggles to deal with problems of proper sanitation, an increase in crime and even homelessness.

People from all over the continent have flooded into what is now affectionately called “the Oil City” in hopes of finding jobs. Instead, they’re finding soaring rent and increasing food prices. “Overnight, we cannot meet the needs of the migrants,” says Cudjoe. “So we have slums.”

The population boom is also taking its toll on Takoradi’s aging infrastructure. Heavy traffic now plagues the city and poor road conditions are grating on people’s patience. After a truck carrying limestone tipped over on an unpaved industry road in June and spilled the hazardous chemical all over the street, residents of the neighbourhood staged a passionate demonstra. tion, blocking the road for several hours and setting rubber tires on fire. Since then, the mayor says there’s been talk of paving the road, but to date, the government has done nothing.

When it comes to oil development, Kwabena Okyere Darko Mensah, the Member of Parliament for Takoradi, doesn’t mince words. “In the last two years, the NDC government has not been able to complete one single major road project in this metropolis, which is supposed to be the oil and gas city of Ghana. This shows you how inept the government is – and this is hyping up the frustration of people,” he says.

The MP says Ghana has a history of mismanaging revenue from extractive resources, but they simply can’t afford to repeat history when it comes to oil. However, the government has yet to pass a local content bill and local service providers are fighting for contracts mostly being awarded to foreign-owned companies.

Mensah says he speaks continuously in parliament about the need for local content legislation, rather than the current policy, which has no legal implications, to ensure Ghanaian companies, can compete in the industry, not only in the oil sector, but in other emerging industries like gas refinery.

“This is oil. This is not the same as diamonds,” he says. “The mistakes we’ve made with gold, the mistakes we’ve made with cocoa, we should not repeat the same mistakes with oil and gas. If we do that, then we are foolish.”

Local content discarded

When I arrive at Captain Michael Nortey’s office for the Friday morning interview we’ve scheduled, the power is out. “Here in Ghana, light outs are a common occurrence,” he says with a laugh. He adjusts the blinds to let in more light before he sits down at his desk.

Born and raised in Accra, Nortey has spent the last 23 years working in the oil and gas industry abroad. When Ghana struck oil three years ago, he saw his chance to finally come home, helping to establish Flat-C Marine Ghana Ltd, an offshore services company that specialises in crew and vessel management.

Nortey and his two business partners thought their combined experience and expertise would be met with a warm welcome, but since returning to their home country, they’ve been faced with an array of challenges they did not expect.  

Their biggest challenge is finances. Nortey says his company is unable to bid on many tenders because they are required to own their own ships. However, they can’t secure the large loans needed to purchase the million-dollar vessels from the country’s weak financial institutions. He and his partners have had to scrape together their savings and take turns going out to sea, working for oil companies, just to keep their company afloat. Sometimes, they’ve been able to partner with foreign companies, but without local content legislation, Nortey says, the foreign companies will never help Ghanaian companies to grow up.

“We’ve even had companies say they don’t want to put any Ghanaians on the ship because the local content isn’t the law, it’s only an advisory,” he says.

He’s sceptical, though, of the government’s ability to pass a local content law. Viewing domestic companies as unwanted competition, he says foreign operators will fight any legislation. “The oil and gas business is an uneven playing field. We’ve been in the business to know the way it works.

Definitely, the oil companies, the support services, the foreign companies, the ship owners – they will do everything necessary and possible to make sure the policy doesn’t come into law, whether by bribery or by explanation or by creating the impression that locals just cannot make it.”

Nortey cites the conflict in Nigeria’s Delta Region as an example. After 53 years of oil production, Nigeria was only able to pass a local content law last year. “This should be a very big lesson to us. By the time they were able to pass the local content law, nearly 80% of the foreign companies are now local companies. They have localised; they have got married to some locals and they consider themselves Nigerians.”

Nhutey Adzeman, executive director of the Ghana Oil and Gas Service Providers Association (GOGSPA), worries Ghana is headed in the same direction and could soon be faced with the same problems. “Basically foreign companies are doing virtually everything,” he says.

GOGSPA, a non-profit advocacy group with over 90 members, was formed in 2009 in response to how the government was awarding oil contracts. The government should put an emphasis on training as an important aspect of developing the industry to provide jobs for local people, Adzeman says. However, he speculates Ghanaian companies already have the capacity to take on no less than 50% of the oil contracts being awarded, but they are “not being given the opportunity.”

In fact, they’re being sideswiped. Adzeman says contracts aren’t even advertised to local service providers and there is no transparency in the industry. On top of that, the Ghana National Petroleum Corporation (GNPC) is doing nothing to build local capacity.

A state-owned entity formed from the Ministry of Energy to regulate the industry, GNPC is a player as well. Instead of helping local companies grow, GNPC has come under heavy criticism of becoming another competitor, leaving the industry vacant of a neutral regulatory body.

Adzeman says the government is more concerned with pleasing the foreign oil companies than about developing the infrastructure needed to support the emerging industry. Along with congested traffic, Takoradi doesn’t have a commercial airport – currently, flights are being directed through the air force base. “Believe you me, in the next year or so, the city of Sekondi-Takoradi will grind to a halt because the infrastructure here is very old and new infrastructure is not being added on. People are coming in day in and day out and the city is getting choked,” he says.

But Ghana doesn’t have to reinvent the wheel when it comes to drafting local content legislation. Adzeman says the country should consider it a blessing Ghana has discovered oil so late after so many other countries have done so. This gives them an advantage they should not squander – to learn from the mistakes of their neighbours.

Rate this article

Author Thumbnail
Written by African Business Magazine

African Business and its award-winning team is widely respected for its editorial excellence. We provide the all important tools enabling you to maintain a critical edge in a continent that is changing the world. Our special reports profile a wide range of sectors and industries including Energy, Oil and Gas, Aviation, Agriculture to name but a few.

Related Posts

Join our mailing list

If you would like Independent, Informative and Invaluable news analysis on the African continent, delivered straight to your inbox, join our mailing list.

Help us deliver better content