Fury over Use of Oil Money

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…as PIAC takes its reports to the districts

Professor Paul Kingsley Buah-Bassuah, Chairman of PIAC
Professor Paul Kingsley Buah-Bassuah, Chairman of PIAC

A composite report on government’s management and use of the country’s petroleum revenues, currently being disseminated in 60 districts across the country, is generating serious concerns, with some participants suggesting that, Ghana is likely to fall into the resource curse trap if the trend continues.

According to the report put together by the Public Interest and Accountability Committee, Ghana has between 2011 and 2015 produced about 162 million barrels of oil, translating into some US$3.2 billion dollars.

The report says that, government has so far complied with the law, regarding the allocation of the revenues among the Ghana National Petroleum Corporation (GNPC), the Annual Budget Funding Amount (ABFA), the Ghana Stabilisation Fund (GSF), and the Heritage Fund (GHF).

Over the period (2011 – 2015) the allocations to these categories have amounted to GHCUS$968.8million to the GNPC, US$1.43 billion to the ABFA; US$604.35 to the GSF; and US$249.92 million to the GHF.

The allocations to GNPC, being 30 percent (revised downwards from 40 percent in the 2015 budget) is to finance the company’s expenditures in respect of cash-calls on the country’s 13.64 percent Carried and Participating interest in the Jubilee Field. What goes to the Stabilization Fund (currently capped atUS$150 million (revised downwards from US$250 million) is intended to help manage the volatility effect of petroleum price fluctuations on the budget. The allocation to the Heritage Fund is in recognition of the interest of future generations in the country’s oil-wealth and meant to create a capital inheritance for them.

The PIAC presentation at the ongoing public forums at the district level provide an overview of oil revenues, but tend to focus more on the ABFA (70 percent of what is left after GNPC’s allocation has been taken care of) and how it has so far been utilised. The report says the expenditure has been in four main categories (as prescribed by the law), namely Agriculture modernisation, Roads and other infrastructure, Amortisation of loans contracted for oil and gas-related activities; and Capacity building.

The PIAC Forum gathered over 70 stakeholders from the six coastal Districts of the Western Region to deliberate on how Ghana’s petroleum revenues have been managed since 2011
The PIAC Forum gathered over 70 stakeholders from the six coastal Districts of the Western Region to deliberate on how Ghana’s petroleum revenues have been managed since 2011

A breakdown of the expenditures in these areas for the period 2011 – 2015 shows that over the period,GHC2,995,757,256 has been allocated to the ABFA, of which GHC329,392,159 has gone into Agriculture Modernisation, GHC1,531,157,925 has gone into Roads and other infrastructure;GHC860,239,783 into Amortisation of loans; and GHC274,967,389 into Capacity building.

What appears to have caused the greatest concern is the thinly spread of the detailed expenditures, and how the Capacity building category has enveloped all manner of expenditures that nominally, can hardly qualify as capacity building. For instance, the report says in 2012 an amount GHC2 million was disbursed to the creative arts industry. Specifically, the amount was paid to the Musicians Association of Ghana.

While PIAC concedes that the development of the creative arts industry deserves attention, it expresses reservation as to whether the expenditure can qualify as a prudent use of the petroleum revenues.

Other 2012 expenditures under Capacity building which equally raised eyebrows are: Skills training in road maintenance – GHC4.1 million; National Youth Authority – GHC445,300; Training of 5000 people with disability in ICT – GHC10 million; Livelihood Enhancement Against Poverty – GHC8.1 million; MASLOC loan-able funds – GHC35 million; Ghana Living Standards Survey – GHC5.4 million.

In 2013, again, under Capacity building, GHC10 million was disbursed to the Venture Capital Fund;GHC2 million to the EXIM Guarantee Fund; GHC45.1 million to improve capacity at primary and secondary schools; GHC556,655 for printing and transportation of stationery to seven regions, among others.

In 2015, the expenditure areas under Capacity building covered School feeding programme, payment of BECE subsidy, Capitation grant; supply of school uniforms in four regions, SHS subsidy and implementation of progressively free SHS.

The education sector expenditures, captured under Capacity building, are in addition to substantial expenditure on education-related infrastructure totaling GHC70.2 million. This revelation caused some participants to question whether or not the Ministry of Education was allocated any budget for the period or not; and what the Ministry did with its budget. It would appear that without such analysis, petroleum revenues may end up replacing tax-funded projects rather than adding on, a situation which the Chairman of the Civil Society Platform on Oil and Gas, Dr. Steve Manteaw contends will undermine the potential impact of oil revenues on the country’s development.

Other concerns being expressed from across the districts, where these consultations are ongoing, have to do with the use of GHC3.6 million for the controversial bus re-branding exercise. At the Kwaebibirem district forum, a 72 year old farmer, Ama Akyaa Konadu of Kade, questioned the wisdom in using such huge amount on the branding exercise, when more buses could have bought with it, and would have helped to ease the stress on public transportation.

The Public Interest and Accountability Committee (PIAC), is a statutory oversight body established by  the Petroleum Revenue Management Act, 2011, Act 815 (as amended), to monitor compliance with the law; provide platform for public debate on government’s management of petroleum revenues; and to undertake independent assessment of the management and use of petroleum revenues.

Its membership is drawn from professional groups such as the Ghana Bar association, Ghana Journalists Association, Ghana Institute of Chartered Accountants, Ghana Academy of Arts and Sciences, think tanks, Trades Union Congress of Ghana, Ghana extractive Industries Transparency Initiative, CSOs and CBOs, National House of Chiefs, Association of Queen Mothers and faith-based groups (Christians and Muslim).

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