Ghana in oil curse trap over prudent use of petroleum revenue

The Public Interest and Accountability Committee (PIAC) is worried Ghana will not be far from suffering the oil curse if government fails to prudently  utilize revenue from petroleum receipts.

Ghana’s total petroleum revenues between 2011 and 2013 stood at 3.29 billion Ghana cedis.

PIAC however says accountability and transparency in utilization of the oil revenues remain a challenge.

According to Committee member, Yaw Owusu Addo, the efficient use of oil revenue depends on prioritization of national projects.

“For example, we have prioritized roads and infrastructure as one of the sectors of our economy that we want to use the oil money; but why should we spread in one year some $20million on 118 roads? Why don’t we pick only two roads and spend the $20million on them so that we can fully construct that road and make them a showcase to the world that this is what Ghana used the oil money for?” he opined.

Inspite of the fall in global oil prices, the country’s oil money is expected to grow bigger with the exploration of oil and gas in new fields.

Executive Director of the African Center for Energy Policy (ACEP), Dr. Mohammed Amin Adam, believes a long-term National Development Plan (NDP) remains crucial to guide the utilization of oil revenue in order “to have a consistent application of the resources to planned projects”.

He adds that Ghana needs a Public Investment Management Plan (PIMP) that ensures that projects are not unduly delayed, value-added projects are selected and such projects do not suffer cost and time overrun.

“While the long-term NDP will guide you in terms of where to spend the money – whether in agriculture, in industry, in education – the selection of projects and the time to deliver those projects are guided by the PIMP,” said Dr. Adam.

The Ministry of Finance has cut down the number of Ministries, Departments and Agencies (MDAs) that receive oil money from 16 in 2012 to six in 2014.

“That is very positive,” noted Dr. Adam. “However the problem has not been cured because the Ministry of Finance does the broad allocation and the ministries that receive the money also distribute thinly across so many projects”.

He is therefore advocating guidelines on the utilization of the oil revenue as part of the Budget guideline to inform the ministries not to “distribute thinly; they should identify projects that they can fund consistently for two–three years and complete those projects”.

Story by Kofi Adu Domfeh 

Petropolitics: Africa oil economies vulnerable to paradox of poverty amidst plenty

Emerging oil and gas producing countries in Africa, including Ghana, are vulnerable to the paradox of poverty amidst the abundance of natural resources.

According to Ugandan-based independent policy analyst, Godber Tumushabe, “oil can be the price for freedom” but the politics of oil governance tends to push local people, especially those living close to resources, to the fringes of poverty.

“The problem of the extractive sector in many African countries is not caused by policy or any forms of the law, but by the greedy politicians who want to monopoly the wealth that comes from the mineral sector,” he observed.

The commercial production of oil in Ghana has yet to satisfy high public expectations in delivery of social goods, including quality education, roads, healthcare and job creation.

Such hopes are heightened with global giants in the oil sector – Chevron, Shell and Exxon Mobil – expressing interest to prospect oil in the country.

Ugandans also anticipate an emerging oil and gas economy that would transform their livelihoods.

But Mr. Tumushabe says it is only in democratizing decision-making over natural resources that African countries can avoid the trap of impoverishing its people.

“If you are to deal with the paradox of plenty and poverty, you need to have systems where the leaders are accountable to the citizens for every decision they make,” he said.

In natural resource dependent communities, political power determines access to natural resources and vice versa, observed Mr. Tumushabe.

He therefore believes civic consciousness and competence are critical in empowering citizens to ask and demand answers to the management of petroleum resources.

Parliaments and the judiciary should also be able to exert oversight over the executive arm of government.

The 2013 Africa Progress Report says millions of Africans have lost trust in the capacity and concern of their governments to manage natural resource assets in the public interest.

Mr Dozith Abeinomugisha, Geologist with Uganda’s Energy Ministry, is confident the oil and gas industry can help deliver the benefits when technical persons are given the room to steer affairs with less political interference.

Story by Kofi Adu Domfeh, in Kampala-Uganda