Crude price fall good for Ghana – ACEP

Ghana stands to gain more from the sharp fall in the price of crude oil than the projected 99-dollar per barrel benchmark based upon which finance Minister Seth Terkper drafted the 2015 budget, the Director of operations and resource mobilisation at energy think tank Africa Centre for Energy Policy (ACEP) Ben Boakye has told Morning Starr's Kafui Dey on Starr 103.5fm.

Currently, the price of crude oil on the world market has fallen by close to 50 percent and hovering around the 50-dollar mark.

“It is actually beneficial [to Ghana] for us to stay at this low prices than any other,” Mr Boachi said, adding that crude contributes just about 3 per cent to Ghana’s GDP relative to West African neighbour Nigeria where the oil industry contributes about 56 per cent to GDP.

“So [Nigeria] can be complaining and not Ghana”, Mr Boakye noted.

Explaining how beneficial the fall in crude oil prices is for Ghana, Mr Boakye said for instance, Mr Terkper took advantage of the price fall on the world market to introduce VAT on the downstream which is raking in about Ghc150 million a month.

Mr Terkper recently told Parliament that there will be a shortfall of Ghc2.7 billion for 2015 as far as revenue mobilisation from Ghana’s oil sector is concerned, due to the price fall.

This means the country’s earlier estimation of raking in Ghc4.2 billion from the sector this year will suffer a big jolt.

In essence, just Ghc1.5 billion is estimated to be raised by the country from the oil sector due to the sharp fall in the price of crude oil on the world market.

Mr Terkper released the new figures when he addressed Parliament about the implications that the plummeting price of crude will have on the young oil producing West African country’s 2015 budget and the overall economy.

The initial estimates as captured in the 2015 budget and fiscal statement that was read to Parliament in November 2014 were calculated at a projected crude oil price of 99 dollars per barrel.

Also, the Minister said as a result of the changes in figures, the estimated fiscal deficit of 6.5 per cent will increase to 7.5 per cent for 2015.

Meanwhile Mr Tekper noted that the estimated total expenditure and arrears clearance for 2015 are expected to decline by Ghc1.5 billion from Ghc Ghc41.2 billion (30.5% of GDP) to Ghc39.7 billion (29.8% of GDP).