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Business News of Thursday, 23 April 2020


Defer some projects over fall crude oil price – Energy Expert tells Govt

Ken Ofori Atta - Finance Minister Ghana Ken Ofori Atta - Finance Minister Ghana

Energy Expert Mr Kojo Poku has asked the Government of Ghana to put on hold some development projects that were stated in the 2020 budget statement due to the drastic decline in the prices of crude oil on the international market.

He noted that the decline in the prices will result in revenue shortfall of about $800million for the Ghana government as far as this year’s budget is concerned, a situation he noted will affect some planned project stipulated in the budget statement for the fiscal year.

Mr Poku, however, noted that the government can take respite in the approved a US$1 billion IMF Rapid Credit Facility expected to be used to mitigate the impact of the COVID-19 pandemic on Ghana’s economy, to fulfill the project.

“The target for the budget was 62 dollars per barrel, now the barrel is about 19 dollars as at today (Wednesday April 21) it means the government will have something like $800million gap within the budget. This is going to create a bit of a problem.

“The good news is that the IMF gave 1billion fund which parliament has approved so the $800million will go make up the difference,” he told TV3 news Wednesday April 22.

He added : “In the mid-year budget review, the Finance Minister will have to come to parliament and tell Ghanaians the measures put in place to make sure that we meet programmes in the 2020 budget .

“AS it stands now, we are aware that there is 800million gap which if we didn’t get the money from the IMF we would have to do away with a lot of the programmes that we intended to do.”

In asking the government to halt some projects due to the revenue shortfall, he said : “The government gave exempt taxes, this is the year of roads and I don’t think if we didn’t get the $1 billion the government would be able to do it.

“But now, some programmes might have to go. I don’t think government can do all with the advent of the COVID-19. It will be a bit difficult for government to do all the things in the budget. They will have to prioritize and do some and leave some to 2022 or 2022.”

Meanwhile, the Chamber of Petroleum Consumers Ghana (COEC) has asked the government to ensure that the Tema Oil Refinery (TOR) becomes very effective again by transacting business with the company.

Duncan Amoah, Executive Director of the COPEC told TV3 in an interview that when government decides to do business with TOR, the refinery will in turn, also attract deals from more oil suppliers.

“TOR and BOST may not have good financial positions or good books to attract that kind of investment the need. So if government went out there to say give us products and we will be able to pay in 90 days, I am sure a lot of the major suppliers will be willing to also do business with TOR.”

He also said : “What government will also need to do is to also put in enough security to ensure that the product that they give doesn’t just get into the system and people now take advantage. Once that happens government will lose substantially.

“And so, government should put in security arrangement at the depots and ensure that we are stocking up just for tomorrow in case process begin to rebound or go up so badly, whatever profit the private market would have made government would have also been able to get some revenue to cushion its own budget.”