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Labor Disputes, Local Concerns Prevent Ghanaian Oil from Helping Ghanaians

An oil production vessel is approached by a traditional fishing canoe. Image by John Soper. Ghana, 2015

Oil was discovered only eight years ago in Ghana, and now its oil and gas industry is one of the most productive in West Africa and its new prosperity has been expected to fuel growth in the Ghanaian economy. Yet, so far, the oil industry has failed to live up to the Ghanaian citizens’ expectations for economic development, fairness to workers, and good relations with local fishermen.

Pay discrimination against Ghanaian workers has become an important issue for both workers and management. At multiple companies Ghanaian workers have claimed that they are being paid significantly less than their expatriate counterparts for the same level of work. At MODEC, a Japanese-owned company that operates the Kwame Nkrumah FPSO (floating production storage and offloading vessel), pay discrimination became such an issue that in October of 2014 the Ghanaian workers organized a peaceful labor demonstration on the FPSO. Management subsequently fired 27 of the demonstration participants and refused to rehire them, despite signing a memorandum of understanding stating otherwise.

“There was clear-cut discrimination—the policies and regulations regulating the oil and gas industry do not work,” claimed one of the workers who was fired.

“The biggest problem we have is the salaries are not uniform. The salaries are very bad,” said Fusseini Iddrisu, the General-Secretary of the GTPCWU (General Transport, Petroleum and Chemical Workers Union). “We want to work out a system with the authorities to have a common salary regime across the board so the workers are paid the same for the same job.”

The GTPCWU picked up the issue after the firings and engaged in collective bargaining negotiations in an attempt to get the workers re-instated. Eventually the issue was brought to Ghana’s National Labour Commission, which ruled on July 22, 2015, that MODEC did not have to rehire the workers, a ruling that disappointed the GTPCWU.

Iddrisu believes that MODEC had very little agency in responding to the demonstration. “Tullow [a London-based oil exploration and production company] is the main blame behind this. MODEC, for instance, is servicing Tullow. From our experience, we realized that Tullow is always influencing MODEC. MODEC has little independence to deal with anything,” Iddrisu said. Both MODEC and Tullow declined requests for an interview. Economic trends have also had a significant effect on how important an issue pay discrimination has become. The sharp drop in global oil prices has caused oil companies to lay off workers in order to maximize profits.

Ghana also has one of the world’s highest inflation rates—nearly 17 percent in 2014. Although many Ghanaians entered the field with hopes of lucrative rewards, they now have to struggle to afford basic commodities.

“Because of inflation, the price of my accommodation has doubled with little change to my salary. I have to come up with the extra money myself,” explained one Ghanaian who works in his company's IT department.

Yet revenue distribution has been an issue ever since oil drilling started. The Ghanaian government ruled that the oil was a national resource and therefore could be distributed throughout the country based on the entire country’s needs. This upset many stakeholders in the western region. One of these is Nana Nketsia V, the Paramount Chief from Essikado in the western region, who believes that projects funded by the oil revenue should help solve problems in the western region because it is the western region that must tolerate the presence of the oil industry, which often has adverse effects on local environments.

“It is wrong. Very, very wrong,” Nketsia V said. “This is part of the problem we are facing, mainly because we are just following the colonial paradigm...colonization was just intended to extract everything. So we created a government that follows this.”

While there have not been any reported oil spills or noteworthy examples of habitat loss, the oil companies have taken actions that are harmful to the environmental health of the region. Reports of gas flaring began in the summer of 2014. Gas flaring is a method used by companies to maintain high levels of production. However, the process releases carbon dioxide and other carcinogens into the air. In June of 2014, the Ghana’s Environmental Protection Agency declared that it would not stop the companies engaging in gas flaring.

The government plays a pivotal role in Ghana’s oil industry: On the one hand, it must act in the interest of the health of its citizens. However, the government is also financially invested in the industry—the Ghana National Petroleum Corporation (GNPC), the government’s national oil company, owns a 13.6 percent stake in Jubilee, one of west Ghana's oil fields. This means it also has an interest to keep production level high in order to gain more revenue, which can be used to fund government projects.

Similar to many offshore oil operations around the world, there have been concerns among citizens that the drilling and transportation of the product to land would have harmful effects on Ghana’s fishing industry. Fishing in Ghana is a respected occupation, its workers revered for their bravery and hard work. Fishermen have complained that the presence of the oil industry has made it more difficult to maintain adequate yearly catches.

“The oil companies have not come to understand the fishermen and their concerns,” said John Eshun, a fisherman from the coastal town of Axim. Regulations state that fishermen must stay at least 500 meters away from any oil or gas production facility. Unfortunately for the fishermen, the fish are attracted to the light produced by the facility, forcing the fishermen to go on trips that are longer and farther out, and also more risky since the vessels used to fish are typically large dugout canoes. Physical confrontations have also occurred between oil takers and fishing boats on the water, resulting, at least once, in the drowning of a fisherman.

“It was midnight and raining heavily. The canoe was crushed and the crew was in the sea, they were fighting to survive and one of my crew died,” Michael Nolcoe, another fisherman from Axim, said. He went on to explain how the crew never received compensation for the incident because they were not able to remember the oil vessel’s identification number.

This event motivated Nolcoe to join the Community Environmental Monitoring and Advocacy Group (CEMAG). CEMAG was created partially “as a platform to monitor the implementation of the mitigation measures contained in the Environmental Impact Statement of the oil companies and also monitor the corporate social responsibility projects of the oil companies,” according to a summary of a three-day workshop in which CEMAG participated.

“We want to understand the real effects of oil and gas on the communities along the coast, especially the ‘fisher folks,’” said Emmanuel Kwofie, one of the leaders of CEMAG.

Helping citizens understand the laws pertaining to the oil industry and its facilities has been a challenge in Ghana. Friends of the Nation, a Ghanaian NGO, has undertaken the task by working to inform citizens, including fishermen, of what to do if there is ever a conflict.

“The government is more focused on the elites in society. That is why we work to bridge the gaps of the grassroots…these are the people who are affected the most,” explained Solomon Ampofo, an extractives expert from Friends of the Nation.

Oil companies have shown that they are willing to engage with the local communities in order to mitigate potential issues. At the beginning of the production phase, Tullow hired community liaison officers as a way to hear concerns from local citizens and for citizens to learn about the corporate responsibility projects Tullow has enacted. Since 2010, Tullow has invested nearly $8 million in higher education scholarships for Ghanaian students.

History has shown that managing a highly lucrative resource in West Africa poses many unique challenges, including mitigating potential hazards to local citizens. At the outset of the drilling, most citizens were thrilled by the presence of the industry because of the expected economic benefits that would come through the tax revenue generated by the industry. Prosperity has been slow to arrive in many parts of the country, however. Revenue from the petroleum has failed to quell concerns about Ghana’s infrastructure woes as power outages and crumbling infrastructure continue to be a part of daily life for Ghanaians.