Business News of 2013-12-16

Ghana is spreading oil revenue too thinly - Expert

An energy policy expert says government is not maximizing the use of Ghana's oil money because it is spreading the money too thinly.

Citing an example from the Ministry of Roads and Transport, Mohammed Amin Adam is wondering how $48 million can be used to construct 63 different road projects covering over 2,134 kilometers.

This was his take on Joy News' policy discussion program, Tarzan's Take. It was revealed that Ghana has received over 3 billion Ghana cedis in its 3 years of producing and exporting oil. The monies come from royalty, equity financing, barrels lifted from the oil fields, corporate tax, dividends.

A part of these monies according to law are to be invested in four priority areas - agriculture modernisation, roads and infrastructure, capacity building, oil & gas infrastructure.

Breaking down the $48 million allocation for 63 road projects, the Executive Director of the Africa Centre for Energy Policy (ACEP) explains the Ministry continues to allocate $11,000 for a kilometer road which costs $360,000.

Under this rate, it would take "not less than 30 years to complete" the road assuming there are no other sources of funding, he predicted. Annual Budgeted Funding Amount (ABFA) which comes from oil earnings was used to fund 16 road projects. But after three years, 40% of roads are below 50% completion.

"Couldn't we have used the ABFA to complete a few projects and then society can benefit from them?” he demanded. He suggests Ghana can learn from Brazil which has passed a law to concentrate on education while others like Chile, Malaysia and Indonesia prioritize agriculture.

He also says whole government has allocated over 111 million to questionable capacity building; it disbursed only Ghc 4 million for agriculture.