CeSIS recommends amendment of Petroleum Revenue Management Act

The Centre for Social Impact Studies (CeSIS) has recommended an amendment of the Petroleum Revenue Management Act that outlines as many as 14 priority areas for petroleum revenue to be expended.

The policy advocacy group says revenues from the sector should rather be concentrated on not more than three priority sectors whilst other areas are catered for through regular budgeting process.

Petroleum revenues present government with an additional source of funding to execute different development agenda.

But CeSIS has expressed worry at findings in the Public Interest Accountability Committee (PIAC) reports on the quality of spending of petroleum revenues over the years.

According to the 2013 PIAC Report, an amount of 23 million Ghana cedis earmarked for capacity building from 2011 to 2013 went into the procurement of goods and services for the Ministry of Food and Agriculture, Ministry of Lands and Natural Resources and National Disaster Management Organisation (NADMO) as well as an additional two million cedis to support the creative industry.

“While admittedly these expenditures are all towards national development, CeSIS is nevertheless worried about a creeping perception that petroleum revenues are "free monies" that should be allocated to any sector of the Ghanaian society,” said the group.

The PIAC report has recommended that government conducts an immediate evaluation of the effectiveness and impacts of all the projects and programmes that have been funded with revenues from the petroleum sector.

The report also says government should “focus its expenditure under the capacity building priority area on interventions that will directly enhance the capacity and capabilities of Ghanaians to play a bigger role in the emerging oil and gas industry as envisaged in the Local Content Policy and Regulation”.

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”, says the African Center for Energy Policy (ACEP).

Executive Director of CeSIS, Richard Ellimah, says the spending on capacity building, for instance, should be restricted to three areas.

These include support to regulatory agencies like the Environmental Protection Agency (EPA) and Petroleum Commission to undertake specialised training in oil and gas regulation; provision of equipment and modern machinery to the regulatory bodies to enable them regulate the sector; and training of a corps of young Ghanaians in oil and gas to be positioned to capture key managerial positions and skilled vocations in the oil and gas industry.

The PIAC was established under the Petroleum Revenue Management Act to provide a public oversight over Ghana's oil and gas industry.

But CeSIS is disappointed at the lack of support for the Committee.

Mr. Ellimah says in the face of mounting corruption allegations and concerns over misuse of petroleum revenue, it is imperative that PIAC is strengthened to perform its oversight role well.

“For purposes of transparency and accountability, government has a duty to empower this committee and ensure it builds the needed confidence in the public that their oil and gas resources are being utilised efficiently to support national development,” he said.

Executive Director of ACEP, Dr. Mohammed Amin Adam, has observed the integrity of Ghana’s oil and gas resources will be better protected when PIAC is given a strong legal status.

He believes such capacity is critical to enable the Committee undertake its own independent analysis and technical work on the use of the country’s oil revenues.

Story by Kofi Adu Domfeh 

Work of Ghana’s oil revenue watchdog hampered by lack of funds

The integrity of Ghana’s oil and gas resources will be better protected when the Public Interest and Accountability Committee (PIAC) is given a strong legal status, observed Dr. Mohammed Amin Adam, Executive Director of the African Centre for Energy Policy (ACEP).

PIAC is a statutory body mandated to monitor and evaluate compliance of the Petroleum Revenue Management Law and ensure prudent use of petroleum revenues by government and various state agencies.

But this mandate to ensure Ghana’s oil revenue is prudently used is hampered by funding constraints hitting the revenue management watchdog.

According to PIAC’s Yaw Owusu Addo, the Committee, as at the beginning of the 2015, had a meager Gh1,000 in its coffers to run activities. This lack of funds has placed huge limitation for the committee to do its work.

“Our situation is dire, very dire,” he exclaimed. “This year we haven’t got any funding for our budget; it is only the benevolence of some benefactors which is allowing us to survive up to today but the money that must come from the taxpayer to support us so that we do this job is not forthcoming.”

PIAC’s annual reports on the management of petroleum revenues serve to inform the Ghanaian public on revenue and expenditure in the oil sector.

Dr. Amin Adam, however, says the legal status of PIAC is very weak as it lacks the power to summon public officials for information and also to go beyond the Attorney-General to proceed to court to prosecute people against whom adverse findings have been made in the mismanagement of petroleum revenue.

He therefore wants the Committee’s capacity adequately built to deliver its mandate.

“I have so much respect for the members of PIAC; these are members who are not coming from the industry background, they are coming from different backgrounds as journalists, as lawyers, as accountants, as traditional rulers, and so they need a strong secretariat with all the technical capacity and if they don’t have that they should be able to have consultants attached to the secretariat,” he requested.

The ACEP boss believes such capacity is critical to enable the Committee undertake its own independent analysis and technical work on the use of the country’s oil revenues.

Dr. Amin Adam hopes a review of the Petroleum Revenue Law should empower the Committee to leverage on its work done so far.

“PIAC in its current state can still play a significant role if they are given the capacity, in terms of the resources,” he noted.

Story by Kofi Adu Domfeh 

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