The Public Interest and Accountability Committee launched an issue paper on the management and use of petroleum revenue.
The issue paper focuses on introspection of how the country has managed the revenues from this natural resource to ensure that the country is insulated from potential trappings of the ‘resource curse’ .
The papaer acccording to PIAC is particularly important, given the inverse relationship between our Gold mining history and impact on development outcome which indicates poverty of good governance.
PIAC, has over the years, raised critical issues relating to the management and use of petroleum revenues, and we believe it is time to highlight all these issues in a single document to ensure that they are given urgent attention and commitment for redress. Hence, the launch of this issue paper today.
In the Committee’s view, bringing these issues to the fore, is a good way to insulate the upstream petroleum sector from the ‘resource curse’ phenomenon that characterised the mining sector so as to ensure the needed socio-economic transformation.
Meanwhile PIAC will from next year its tenth anniversary and will roll out series of commemorative activities on the upstream petroleum sector and its governance.
Beneath are highlights of the issue paper.
- PIAC’s assessment of the management and utilisation of the Annual Budget Funding Amount (ABFA) mechanism over the years, has revealed that even though government has been consistent in selecting the four priority areas as per the law, actual expenditure normally stretches beyond the 12 listed priority threshold.
- Associated with the above challenge is the thin- spread of the revenue for projects, characterised by paltry allocations, in which way, makes it difficult to appreciate any meaningful impact associated with the expenditure.
- Another worrying trend is the non-utilisation of and accounting, for the full ABFA allocation even though the budgetary amount is disbursed to the ABFA account. PIAC’s visits to some projects earmarked to receive petroleum revenue revealed that they have been starved of funds at a time when revenues are reported to be unutilised and unaccounted for.
- The Committee also observes that over the years, some International Oil Companies (IOCs) have developed the practice of non-payment and deferred payment of Surface Rentals which is a source of petroleum revenue stream. This practice undervalues the Ghana Petroleum Holding Fund, and does not comply with the provisions of the PRMA.
- PIAC has observed a loophole in allowing the Minister for Finance to place a cap on the Ghana Stabilisation Fund (GSF) at his or her discretion as necessitated by macroeconomic conditions; albeit with the approval of Parliament. To place a cap on how much can be accrued to the Fund, there is no established criteria for the determination of the cap and use of proceeds.
- We note with concern that 10 years into oil, the effectiveness of an Investment Advisory Committee (IAC) is difficult to measure. The country is still stuck to the practice of investing in low qualifying instruments, a practice we believe can be better improved with a well-resourced, functional, and independent IAC. The advice of the IAC is not mandatory on the Minister for Finance, undermining the core essence of the PIAC.