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Business News of Saturday, 9 May 2015

Source: Graphic.com.gh

IMANI cries foul over petroleum revenue

A policy think tank, IMANI Centre for Policy and Education, has raised issues over the allocation of more funds from petroleum revenue to government machinery compared to the health sector.

In its report on accountability in Ghana’s oil sector, released in Accra yesterday, IMANI said in the 2015 budget, the government allocated GH¢43,550,000 to the health sector, while GH¢142 million was allocated to the government machinery.

The report tracked the country’s annual budget for financing socio-economic interventions as spelt out in the Petroleum Revenue Management Act 2011 (Act 815).

Presenting the report, a research officer of IMANI, Mr Kofi Boahen, said given the critical nature of the health sector, it was worrying that the government chose to depend on donor funds to finance expenditure in the sector instead of using the oil revenue which it controlled.

“If donor support declines, what happens to the health sector? It is difficult to understand why we have to allocate GH¢142 million to government machinery. What is going on there? This amount is going into recurrent expenditure,” he said.

Findings

The report, funded by Oxfam, also said the education, health and agricultural sectors were also not allocated significant portions of petroleum revenue within the period under review.

The report, entitled “Citizens Demand for Accountability in Ghana’s Oil and Gas Sector,” which analysed the country’s Annual Budget Funding Amount (ABFA), showed that out of the GH¢1.8 billion (ABFA) spending from 2011 to 2014, only GH¢435,236 representing 0.02 per cent was spent on the health sector.

The report also said the education sector received GH¢19.6million, which was less than two per cent of the GH¢1.8 billion spent, while the agricultural sector received close to GH¢270 million, representing 14.4 per cent out of the total amount spent.

According to the report, the road sector was the largest beneficiary of the ABFA, receiving GH¢544.9 million, which represented 41.2 per cent of the total expenditure.

Mr Boahen said the efficiency of spending petroleum revenue remained a challenge, as ABFA funds were thinly distributed over many capital projects.

“This obviously will delay the socio-economic benefits of these projects,” he contended.

Recommendations

Mr Boahen, therefore, recommended that to curb the problem of inefficient spending, disbursement of petroleum revenue should be based on an investment plan guided by a long-term national or medium-term development framework.

“Government should commit substantial portions of the petroleum revenues to the pro-poor sectors, as these sectors are pivotal in the pursuit of sustainable economic development,” he said.

According to Act 815, the use of ABFA funds shall be on two pillars – to maximise the rate of economic development and guided by a medium-term expenditure framework aligned with a long-term national development plan.

Other issues

Contributing to the discussion, the Chairman of the Civil Society Platform on Oil and Gas, Dr Steve Manteaw, expressed concern over the inability of Parliament to pass the Exploration and Production Bill to replace PNDC Law 84, which currently regulates the industry.

According to him, the current law is limited in scope and does not address some critical issues including the issue of oil spillages.

An oil economist, Mr Theo Acheampong, observed that while it was good for the country to have a strong local content law, the current law was too ambitious as it lacked the needed structures to achieve the target.

But the National Democratic Congress (NDC) Member of Parliament for Damango, Mr Adam Mutawakilu, said the country was building capacity to ensure that in the near future, if it decided not to renew the contract of the companies in the oil fields, there would be capable people to take over.