Business News of Friday, 22 November 2013
Source: Graphic Online
The Public Interest and Accountability Committee (PIAC) has expressed deep concern over the government’s failure to utilise the country’s petroleum revenue according to the specifications of the Petroleum Revenue Management Act, 2011 (Act 815).
The committee observed that in 2012, the government did not implement the plan of petroleum revenue allocation approved by Parliament in the 2012 national budget in respect of the Annual Budget Funding Amount (ABFA), adding that it failed to provide explanation for the anomaly.
According to the PIAC’s ‘Report on the Management of Petroleum Revenue for Year 2012’, although the law required the Minister of Finance and Economic Planning to prioritise not more than four areas for the allocation of the ABFA, he made allocations to all the 13 priority areas listed in the law.
“This defeats the objective of priority setting meant to achieve optimum impact from spending of petroleum revenue by government as defined in Section 21(5) of Act 815,” it noted.
The report, which was launched in Accra yesterday, cited the allocation of petroleum revenue of GH¢65 million to the Office of Government Machinery, GH¢33.3 million to the Ministry of Lands and Natural Resources, GH¢13 million to the Ministry of Trade and Industry and such similar priorities, saying such allocations “can only promote consumption spending as opposed to investment spending in line with spending objectives defined in the law.”
The Chairman of the PIAC, Major George Ablorh-Quarcoo (retd), who presented details of the report, said although the committee had contacted the finance ministry to provide explanation for the anomaly, the ministry had not yet responded.
In order to address the problem, the PIAC advised the finance ministry to consider using a dedicated account to receive the ABFA from the Petroleum Holding Fund at the Bank of Ghana.
“This will ensure that allocations from this account can be tracked to give meaning to transparency and accountability,” it stated.
Another big worry to the PIAC in its annual report was the fact that actual transfers to the Ghana Petroleum Funds, comprising the Heritage Fund and the Stabilisation Fund, fell short of target by 82 per cent.
It attributed the shortfall to misinterpretation of Section 23b of Act 815, and advised the finance ministry to address the issue.
The report also indicated that the oil entitlements of the Jubilee Partners had changed, with Ghana’s share reducing marginally from 18.0625 per cent to 17.9588 per cent.
That followed a redetermination of the Original Hydrocarbon-in-Place in the Jubilee Fields in 2012, in accordance with the partners’ Utilisation and Unit Operating Agreement (UUOA).
The report noted that for the second consecutive year, no corporate taxes were received “because the companies were not in a tax paying position as cautioned by the PIAC in the 2011 Annual Report.”
It said the inclusion of corporate taxes in expected petroleum receipts in 2012 (just as in 2011) had distorted the Benchmark Revenue determination and, subsequently, the distribution of actual revenue during the period.
The report projected that if peak production was achieved in 2013 and expected corporate taxes were collected, petroleum receipts “are likely to be higher than projected for the first time, as end of year crude oil prices are not expected to fall below $95 per barrel.”
Among other recommendations, the report called for an amendment to Act 815 to enable the PIAC to become more effective; an early passage of a legislative instrument for Act 815, and adequate funding to enable the committee to discharge its mandate better.