28 July 2014

Ghana: Report Praises Gov't Over Petroleum Management

Government has improved substantially on its management of petroleum revenues Act by complying with its mandate under the law, passed in 2011, according to a report.

The report indicated that government has also responded to some of the violations reported in previous reports through reforms such as the Capital gain tax, reporting on Saltpond royalties, and reporting on surface rentals. The report, which is the first quarter of the petroleum management revenue act in 2014 budget was aimed at reviewing the budget and established the level of compliance or violation of the budget conducted by the Centre for Public Interest Law supported by STAR-Ghana, a multi donor-pooled organization.

Dr. Mohammed Amin Adam, Consultant for the study, said the law has been implemented for the past three years and there has been a challenge which has led to the government decision to amend sections of the law. He said the revenue streams defined in Section 6 of the Act 815 as sources of petroleum revenues included royalties, additional oil entitlements, surface rentals, other receipts from any petroleum operations and from the sale or export of petroleum.

Others include any amount from direct or indirect participation of government in petroleum operations, corporate income taxes in cash from upstream and midstream petroleum companies. The rest are any amount payable by the national oil company as corporate income tax, royalty, dividends, or any other amount due in accordance with the laws of the country.

He said in 2011, government revenue on royalties, corporate income tax, surface rentals, and gas receipts was 444, 124, 724, while in 2012 it was 541,623,740, in 2013 the revenue was 846,767,184 and in 2014, it was 776,999,703. Dr. Adam said Ghana National Petroleum Corporation (GNPC) received a total amount of 207,964,303 million dollars in 2011 and total expenditure was 207,964,303 million dollars, in 2012.

The Corporation received 230,949,926 million dollars and its total expenditure and commitment was 230,949,926 million dollars, while in 2013, it received 222,421,416.20 million dollars and its expenditure was 142,393,867.06 million dollars. He noted that the Corporation's commitment to projects in 2012 amounted to 616,674,215 million dollars with 8,921,473 allocated to reserves towards corporate investment projects, while the total commitment projects for 2013 amounted to 9,922,975 million dollars.

Dr. Adams said the Corporation has not yet provided detailed information on the utilisation of 8,921,473 dollars reserved since 2012 for corporate investment projects. "It is suspected part of this money went into the sponsorship of Ghana Black Stars preparation and participation in the 2014 World Cup in Brazil. The sponsorship also allegedly covered some 40 staff workers of GNPC and their families who were sent to Brazil to watch the tournament," he added.

He said the GNPC has denied this and argued that the 40 staff workers travelled on a charter plane without their families; and that the families of their workers joined them on a commercial flight which was not sponsored, according to a statement issued by the corporation. The statement also said the workers were in Brazil to promote its brand. He said government as at September 30, 2013, disbursed 89.8 million dollars as part of the150 million dollars counterpart funding for the China Development Bank loan of three billion dollars for the finance of the Ghana Gas Infrastructure Project at Atuabo in the Western Region.

Dr. Adam added that another 114,883,351 million dollars was allocated to Ghana Gas which brings the counterpart funding to 204,683,351million dollars. He said the money was allocated from Annual Budget Funding Amount (ABFA) instead of GNPC's share of revenues, which was not consistent with the spirit of the law.

"This may be the reason GNPC has not been able to spend 141,701,764.14 dollars of the total cash allocated to it in 2012 and 2013," he said. He recommended that government must regularise the use of the amortisation component of ABFA outside the Petroleum Revenue Management framework which requires an amendment to the law.



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