Business News of 2013-12-12

‘Ghana not efficiently spending oil revenue’

Ghana is not spending its petroleum revenues efficiently, the Executive Director of the Africa Centre for Energy Policy, Mohammed Amin Adam, has said.

“I do not think Ghana is getting it right with the efficient investment of its oil revenue resources,” he said with the explanation that this would defeat the objective of ensuring that resources were translated into good development outcomes.

Mr Amin was interacting with journalists, who were participating in a seven-day oil, gas and mining reporting training programme in Accra organised by Penplusbyte in collaboration with Revenue Watch?Institute.

It was themed: “empowering the media to play an active watchdog role over oil and gas revenues and resources.”

Revenue management

Mr Amin pointed out that revenue from the black gold, which Ghana started producing in December 2010, had to be put to good use to avert the plague that other oil producing countries, especially developing countries endowed with hydrocarbon resources, had suffered. Ghana discovered oil in commercial quantities in the deep seas in 2007.

To manage oil revenues properly, Mr Amin explained that three areas, including transparency about where revenues were being invested, accountability on how much was being received and efficiency on how the money was being spent were essential.

He referred to how the oil revenue was put to use in the year 2013 where an amount of $24 million was spread over 63 projects covering about 2,124 kilometres road projects “this is not efficient spending because each of the projects would take not less 30 years to complete and in some cases the cost of the project has already doubled.”

He said, “Ghana is not deriving value for money from the infrastructure projects funded with oil revenue as most of the projects had been delayed, operating under costly extensions and leading to cost over-runs. The money is supposed to be used for investment to improve living conditions of the people.”

Recommendation

Mr Amin, who recommended that the government considered spending on a few projects for purposes of efficiency, stated that it was not enough to provide transparency and accountability without putting the revenue to good use.

“Ghana is being rated very high in terms of accountability, if we do not take care, it would cloud our sense of efficiency of spending revenue,” said Mr Amin.

However, he was happy that the Minister of Finance, Mr Seth Terkper, in the 2014 budget, which was presented to Parliament, announced that revenue from the petroleum sector would be allocated to specific projects.

Barrels of oil?lifted

According to a Deputy Minister of Finance, Mr Kweku Rickette-Hagan, as at August 2013, a total of 74 million barrels of oil had been produced from the Jubilee field and that revenues received were allocated to various allowable sources in accordance with the Petroleum Revenue Act.