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Business News of Monday, 10 August 2020

Source: justice offei jr., contributor

PIAC report exposes finance ministry's failure to account for unutilised ABFA

The Ministry of Finance has for the third consecutive year failed to account for unutilised Annual Budget Funding Amount (ABFA) of oil revenues,the Public Interest and Accountability Committee (PIAC) has disclosed.

In its 2019 annual report on the management and use of petroleum revenues launched in Accra, the committee revealed that the amount stood at GH¢1.5 billion at the end of 2019. The ministry was also cited for violating portions of the Petroleum Revenue Management Act (PRMA) 893 and Ghana Investment Infrastructure Fund (GIIF) Act 877.

The Chairman of the Committee, Mr Noble Wadzah has therefore urged parliament to bring its oversight mandate to bear on the ministry’s “impunity and failure for not accounting for unutilised ABFA” and other violations. The 2019 PIAC Report covering the period January to December, encompasses issues including the management and utilisation of petroleum revenues and findings pertinent to the performance of various institutions in the sector. It is inline with PIAC's statutory obligation under the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), which enjoins PIAC to publish reports to keep the citizenry updated on petroleum revenue and solicit feedback.

Giving highlights of key findings of the report, Mr Wadzah said the total ABFA available for spending last year was GH¢2.7 billion out of which GH¢1.2billion was utilised leaving a balance of GH¢1.5 to be utilised and accounted for.

“For the third consecutive year, not only has a sizable proportion of the ABFA not been fully utilised but it has not been accounted for, impeding PIAC’s appreciation of the full scope of accounting to the public on the utilisation of our petroleum revenues", he said.

In the same period, he disclosed that 45.14 per cent of the actual ABFA was spent on recurrent expenditure, with 54.86 per cent on capital expenditure in violation of Section 8(4) (a) of Act 893 which required that a minimum of 70 per cent be spent on public investment expenditure.

Additionally, he said for the second consecutive year, “there was no allocation from the ABFA to the Ghana Infrastructure Investment Fund (GIIF), contrary to the provisions of the PRMA and GIIF Act 877.”

The PIAC report reiterated its call on Parliament to restrict portions of the Ghana National Petroleum Corporation’s (GNPC) corporate social responsibility (CSR) and guarantees to state institutions, especially since the corporation was unable to respond to some of its cash calls.

It disclosed that the corporation provided guarantees amounting to US$645.5 million to state-owned enterprises (SOEs) last year and was almost double, compared with the previous years’ guarantees while it outweighed its total equity financing expenditure of US$164.79 million for the period.

“GNPC’s expenditure on Corporate Social Initiatives (CSI) remains high, increasing from GH¢41.49 million in 2018 to GH¢49.98 million in 2019”, the report stated.

The report also asked the government to address the indebtedness of the Ghana National Gas Corporation as it was unable to pay $334.6 million worth of raw gas received from GNPC, largely due to Volta River Authority’s debt.

The report revealed that US$925.04 million was disbursed from the Petroleum Holding Fund for the period under review, constituting a decrease of 5.33 per cent from that of 2018, and 14.41 per cent less than projected for 2019.

On production, the report said, a total of 71.4 million barrels of oil was obtained from the three production fields, exceeding 2018 production by 15 per cent while gas production shot up by 85 per cent to 169,508.61 million standard cubic feet of gas.

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