Dublin Core
Title
Comparative Analysis of Ghana’s Fiscal Regime and Petroleum Agreements.
Creator
Maureen Owusu Asante
Description
The upstream oil sector the major source of government revenue for natural resource rich countries. Though the sector is a highly lucrative one, which plays a key role in the growth and development of a country, the sector is a highly capital intensive one. Thus, most developing countries are unable to raise the required investments to develop these resources. These developing must thus engage International Oil Companies (IOCs) in developing the resource. Existing literature suggests that most fiscal systems/ regimes do not enhance state’s take in the agreements drawn because they are liberal to encourage the FOCs/IOCs to invest their scarce but huge capital in this capital-intensive activity.
The study reviewed theories concepts and findings from prior studies in the subject area. Prior studies revealed that Ghana has employed a hybrid fiscal regime comprising of product sharing and a concessionary system to regulate petroleum projects. Key instruments adopted in Ghana’s fiscal regime include royalties, carried interest, additional oil entitlements and corporate income tax. The study further reviewed petroleum regulations governing petroleum activities in the country.
The study delves into the methods and instruments used in analyzing the data gathered for the study. Financial models including the Net Present Value method, payback period, internal rate of return and return of investments were used in assessing the efficiency of Ghana’s fiscal regime. The study revealed the weakness of Ghana’s fiscal regime in yielding optimum returns from the nations’ oil resource. The analysis of Net Present Value and the Internal Rate of Return of cashflows for a ten year period (from 2008 to 2017) from the jubilee field generated according to the terms of Ghana’s fiscal regime, was the least when compared to the Net Present Value and the Internal Rate of Return, when the terms of fiscal regimes of Equatorial Guinea, Norway and Nigeria. The Payback period for Ghana’s fiscal regime was found to be among the regimes with the lengthiest payback countries among the selected fiscal regimes. The results reveal that Ghana is realizing only a small portion of its potential revenue from oil production.
The study recommends that Ghana’s government must embark on an exercise to review legislations regarding upstream petroleum activities and pass necessary amendments to suit current trends in upstream petroleum activities. The review and amendments of these regulations should be focused on optimizing the returns from oil exploration, development and production.
The study reviewed theories concepts and findings from prior studies in the subject area. Prior studies revealed that Ghana has employed a hybrid fiscal regime comprising of product sharing and a concessionary system to regulate petroleum projects. Key instruments adopted in Ghana’s fiscal regime include royalties, carried interest, additional oil entitlements and corporate income tax. The study further reviewed petroleum regulations governing petroleum activities in the country.
The study delves into the methods and instruments used in analyzing the data gathered for the study. Financial models including the Net Present Value method, payback period, internal rate of return and return of investments were used in assessing the efficiency of Ghana’s fiscal regime. The study revealed the weakness of Ghana’s fiscal regime in yielding optimum returns from the nations’ oil resource. The analysis of Net Present Value and the Internal Rate of Return of cashflows for a ten year period (from 2008 to 2017) from the jubilee field generated according to the terms of Ghana’s fiscal regime, was the least when compared to the Net Present Value and the Internal Rate of Return, when the terms of fiscal regimes of Equatorial Guinea, Norway and Nigeria. The Payback period for Ghana’s fiscal regime was found to be among the regimes with the lengthiest payback countries among the selected fiscal regimes. The results reveal that Ghana is realizing only a small portion of its potential revenue from oil production.
The study recommends that Ghana’s government must embark on an exercise to review legislations regarding upstream petroleum activities and pass necessary amendments to suit current trends in upstream petroleum activities. The review and amendments of these regulations should be focused on optimizing the returns from oil exploration, development and production.
Subject
MBA in Petroleum Economics and Finance
Publisher
Ghana Technology University Library
Date
September, 2019
Contributor
Dr. Riverson Oppong