IN Nzemaland, Southwestern Ghana, community activist groups are currently engaging with civil society organisations such as IMANI and ACEP to address their grievances regarding a governmental land appropriation for a proposed ‘Petroleum Hub.’ This 20,000-acre territory within the Domunli enclave in Jomoro municipality is set to be nationalised for the benefit of unspecified investors, stirring significant local unrest.
Project origins and delays
Initiated in 2018, the Petroleum Hub was projected to be completed by 2030. However, six years later, the first phase, which should have been 80 percent complete, has yet to begin. The government’s sudden push to nationalise the communal land has exacerbated local tensions, particularly as the first phase involves ecologically sensitive areas such as the Domunli Lagoon and seashore.
The original project plan outlined a grand vision for the Petroleum Hub, including a 300,000 barrels-per-day oil refinery, one million cubic metres of petroleum products storage, petrochemical plants for agrochemical production, and extensive port facilities. Supporting infrastructure, such as access roads and utilities, was also part of the $12 billion phase one budget. However, these developments have not materialised, leading to growing scepticism among the local population.
Economic and environmental impact
Zoning analysis indicates that the project would devastate economically significant coconut plantations and communal farms, displacing entire communities. The local economy in Nzemaland relies heavily on a regional coconut value chain, which would be severely disrupted by the Petroleum Hub. Additionally, the environmental impact on sensitive areas like the Domunli Lagoon raises significant concerns.
The planned infrastructure includes massive oil refineries, petrochemical plants, and storage facilities, demanding extensive land and resources. Two communities, Kabenle-Suazo and Bokakole Nkwanta, would be completely relocated, while five additional communities would face significant upheaval. The potential destruction of local livelihoods and displacement of residents has fuelled the activists’ anger and resistance.
The ecological significance of the Domunli Lagoon cannot be overstated. It serves as a critical habitat for various species and supports the livelihoods of many who rely on fishing and related activities. The potential contamination from petrochemical activities could have long-lasting impacts on the biodiversity of the region and the health of its residents.
Legal and historical context
Ghanaian law permits government land seizures for public interest under acts like the State Lands Act and the Administration of Lands Act. However, such appropriations historically end in land being transferred to private entities under dubious circumstances. Activists cite examples such as the Achimota Forest debacle, where land initially seized for public use ended up with private developers.
Lands appropriated for public projects often find their way into the hands of politically connected individuals
The history of land seizures in Ghana is marred by numerous cases of corruption and misuse. Lands appropriated for public projects often find their way into the hands of politically connected individuals. This pattern has eroded trust in the government’s intentions, making communities wary of any new land appropriations.
For instance, the Achimota Forest, originally set aside for meteorological purposes, was leased to private developers at negligible rates, resulting in luxury condominiums instead of public facilities. Similarly, lands intended for aviation purposes have been converted into high-end residential properties. These precedents have left communities like those in Nzemaland sceptical of the true intentions behind the Petroleum Hub project.
Calls for equity and fair compensation
Activists argue that communities should be treated as equity stakeholders in commercial projects, as seen in other countries. Nzema activists demand equity reflecting the high value and risks associated with their land. The land’s potential worth, if fairly appraised, could amount to billions of dollars, and the community seeks returns that respect standard financial norms on risk.
In Canada and other places where indigenous communities have organised, equity stakes are becoming the norm. Nzema activists believe their contribution of valuable land to the Petroleum Hub project warrants significant equity and participation in decision-making processes. They argue that merely providing compensation for land is insufficient, given the risks and long-term impact on their livelihoods.
Nzema activists are pushing for a model similar to those in regions where indigenous populations hold significant stakes in projects that affect their land. This approach would not only provide financial returns but also give the community a voice in the project’s management and development, ensuring that their interests are adequately represented.
Operational and commercial risks
The project faces significant operational risks, including the feasibility of meeting regional demand within a 48-hour delivery window and competition from other regional refineries like Dangote’s in Nigeria. The Petroleum Hub aims to supply 50 percent of West Africa’s projected fuel demand by 2035, but current refinery capacities and planned projects in the region raise doubts about its viability.
Ghana’s Environmental Protection Agency (EPA) highlighted the strategic environmental assessment of the Petro-Hub project. While the location in Ghana offers logistical advantages, similar claims could be made by other West African countries. The lack of infrastructure, such as railway networks to landlocked countries, adds to the operational challenges.
Additionally, the region’s existing refinery capacity is already being expanded, with new projects like the Dangote refinery in Nigeria and the Sentuo refinery in Ghana expected to increase output significantly. These developments could saturate the market, making it difficult for the Ghanaian Petroleum Hub to find a stable customer base.
Environmental risk
The project’s environmental risks are substantial, with concerns about the capacity of Ghana’s Environmental Protection Agency (EPA) to enforce mitigation measures effectively. The Domunli Lagoon and surrounding areas are ecologically sensitive, and any industrial activity poses significant risks.
Scepticism about the EPA’s ability to enforce environmental regulations is widespread. The government has already breached recommendations from its own regulators. The EPA’s strategic environmental assessment recommended comprehensive baseline surveys and emergency response plans, which have not been fully implemented. This lack of compliance heightens fears of environmental degradation.
Leakages and waste treatment failures could have catastrophic consequences for the Domunli Lagoon and its surroundings. The Niger Delta’s experience with oil spills and pollution serves as a cautionary tale, highlighting the potential for similar environmental disasters in Nzemaland if the project proceeds without stringent safeguards.
Questionable investors
The consortium backing the project, including UIC Energy Ghana Limited and Touchstone Capital Group Holdings, lacks credibility. UIC has a history of failing to deliver on multibillion-dollar deals, while Touchstone, which claims to finance the project, appears financially unstable and associated with questionable activities. Previous similar attempts by companies like Kallo Inc. have also failed to materialise, raising further doubts.
UIC Energy Ghana Limited, another major player in the consortium, has also been criticised for its track record. The company has signed several high-profile deals that have not progressed beyond initial announcements. This pattern of unfulfilled promises further undermines confidence in the consortium’s ability to deliver on the Petroleum Hub project.
Community demands and government response
Given these risks, Nzema activists insist that the government must grant them a significant equity stake in the project. They also demand participation in all decision-making processes, ensuring their interests are safeguarded. This approach mirrors successful models in countries where communities are treated as genuine stakeholders in large-scale projects.
Activists argue that the community’s contribution of land should be recognised with significant equity and decision-making rights. They demand transparency and accountability in the project’s development, insisting that the government address their concerns and provide fair compensation. The activists’ calls for equity are based on the principle that the community should share in the project’s benefits and risks.
The government’s response to these demands has been mixed. While some officials have expressed a willingness to engage with the community, others have dismissed the activists’ concerns as obstacles to development. This lack of a unified response has further fueled tensions and distrust.
The lowdown: risk and reward
In view of all these risks, the people of Nzema cannot contribute their valuable land to the Petro-Hub project unless, like every other investor, they are rewarded with a considerable equity stake commensurate with the project’s risk profile and with full rights of participation in all decision-making including investment due diligence. Regardless whether and which investors finally come through with the funds for development of this giant asset.
The risks associated with the project are substantial, and the community’s demand for equity is grounded in a desire to ensure fair treatment and long-term benefits. The community’s valuable land should not be appropriated without adequate compensation and participation in the project’s governance. By treating the community as equity stakeholders, the government can build trust and ensure that the benefits of the project are shared equitably.
The Petroleum Hub project in Nzemaland faces significant opposition due to its potential environmental impact, the displacement of communities, and dubious investor credibility. Activists demand fair treatment and equity stakes to reflect the risks and value of their contributions. As the government moves forward, it must address these concerns to ensure a fair and transparent process that benefits all stakeholders.
By acknowledging the legitimate concerns of the Nzema community and ensuring their participation in the project, the government can avoid repeating past mistakes and build a more inclusive and sustainable development model. The activists’ demands for equity and transparency highlight the need for a new approach to land appropriation and large-scale projects in Ghana.
The Petroleum Hub project’s outcome will set a precedent for future developments in Ghana and potentially across Africa. Ensuring fair treatment and participation of local communities can serve as a model for sustainable and inclusive development, balancing economic growth with social and environmental responsibility.
Bright Simons is a Ghanaian social innovator, entrepreneur, writer, social and political commentator. He is the vice-president, in charge of research at IMANI Centre for Policy and Education. He is also the founder and president of mPedigree. You may read the original of this op-ed on his blog, The Scarab
