Government has been asked to reduce the energy sector regulatory bodies from four to two to create sanity and promote coordination.
This recommendation was made by an energy expert Bhamy V. Shenoy, after reviewing the Advisory Paper on Gas Sector Regulations in Ghana developed by USAID and the Gas Master Plan developed by the Economic Consulting Associates.
According to him, “there are currently four regulatory bodies performing different different functions, companies and institutions of the energy sector. Time has now come to reflect if Ghana needs four regulatory bodies or can manage with a lesser number. While studying the regulatory scenarios of other countries – both developed and developing – is useful, we need to consider Ghana’s specific conditions in terms of the stage of her energy sector development, competence and expertise of professionals available in the country, as well as the political, economic and social environment in Ghana.
“After considering these factors, I am of the opinion that just two regulatory bodies are needed – one for the Petroleum sector (Oil and Gas) and the other for all aspects of the sector. I would have preferred just one super regulatory body for the entire energy sector. However, considering the complexity and almost full-time aspect of monitoring the nascent oil and gas sector, I opted for two bodies,” he stated.
Currently, there are four regulatory bodies: the Petroleum Commission which regulates technical aspects of the upstream sector; the National Petroleum Authority, NPA, which regulates the economic and technical aspects of the downstream sector, the Public Utility Regulatory Commission, PURC, for regulating the economic aspects of the midstream and downstream and the Energy Commission, EC, which regulates the technical aspects of the midstream and downstream operations.
“While analyzing the functions of four regulatory bodies, it becomes apparent as described in both the documents (especially in Advisory Briefing paper) that today some functions overlap and can give rise to confusion and contradiction.”
He said since the size of Ghana’s energy sector is not huge and relatively easily manageable; there is no need to burden the economy with several regulatory bodies. Besides, Ghana at present does not have the luxury of competent professionals to manage them.
“I suggest the following two regulatory bodies for Ghana’s Energy Sector, 1. Petroleum Commission (PC) to regulate and monitor all the technical, economic and commercial aspects of upstream and midstream. They will be in charge of PSAs for oil and gas and the Energy Regulatory Commission (ERC) to regulate the rest of the energy sector excluding the regulatory functions reserved for PC.”
“There are several benefits in having just two regulatory commissions. We will reduce the number of regulators and professionals to manage the functions of the two bodies efficiently in comparison to manage four such bodies. Division of labor between technical and economic functions will also lead to developing greater expertise and competence to carry out the responsibilities assigned to the two regulatory bodies”.
“We will avoid the present overlap of functions by having just two bodies. We will improve the productivity of the regulatory institutions by having two instead four since the amount of work needed to regulate the energy sector of Ghana is not so enormous to have four such bodies”.
To avoid likely conflict of interest and also to streamline the regulatory functions, all the regulatory functions concerning environmental protection should be done by the ministry in charge of environment. Since environmental protection requires special expertise, the Petroleum Commission should not be burdened with that function.
It is true that the oil companies would prefer working with one ministry or body to facilitate faster decision making and also to secure needed permits, in this case it is better to assign environmental protection to a ministry which specializes in that.
Environmental protection being an extremely critical and strategic topic there should be no compromise in the name of expediting the permitting process or simplification of complying with and monitoring of environmental rules and regulations.
By Adu Koranteng