Business News of 2013-12-30

Petroleum Revenue Act to be amended

The Petroleum Revenue Management Act (PRMA), Act 815, is to be amended early next year to rectify some inconsistencies that exist in the current law, two-and-half years after it was enacted (in 2011).

Some of the inconsistencies identified in the law include the calculation of the Petroleum Benchmark Revenue and allocations to the Ghana Petroleum Funds (the Ghana Stabilisation Fund and the Ghana Heritage Fund) (GHF) and Annual Budget Funding Amount; membership of the Public Interest and Accountability Committee (PIAC) and the qualifying instruments which Ghana Petroleum Funds (GPF) should be invested in.

The Director of Real Sector Division of the Ministry of Finance, Dr Joseph Kwadwo Asenso, told the Daily Graphic that the amendment would ensure a smooth, efficient and transparent implementation of the PRMA.

“It is necessary for all to get involved because the law was crafted through a consultative process with the view of ensuring that every Ghanaian voice was heard. Once again, we at the ministry do not purport to know everything. Other people may have ideas that we may not have considered, which could be used to improve the PRMA,” he explained

PRMA 815

The PRMA provides a legal framework for the collection, allocation and management of petroleum revenue in a responsible, transparent, accountable and sustainable manner for the benefit of Ghanaians in accordance with Article 36 of the 1992 Constitution.

Why the review

Dr Asenso explained that although Section 7 (2a & 2b) stated that payments into the Petoleum Holding Fund (PHF) shall be the net of the Equity Financing Cost and the National Oil Company’s (NOC) share of the net Carried and Participating interest, all the moneys were collected into the PHF before the NOC’s share was transferred.

That, he noted, was to make for easy accountability by the stakeholders, and indicated that it was being proposed to explore the possibility of amending the law to conform to the current practice.

On the membership of the PIAC, he explained that although Section 54 (1) provided for the membership of the PIAC to be 11, the same section enumerated 13 slots to be filled.

Dr Asenso said it was being proposed that the section be reviewed to make the numbers consistent, either 11 or 13.

On investment instruments, he explained that the ministry was seeking a review of the law to include higher yielding instruments based on an approved list of guidelines in the investment policy.

According to him, the current practice had been to invest in exactly the same instruments as enumerated in the PRMA, which he said, tended to yield lower returns than would otherwise have been the case if it had been invested elsewhere.

Minister of Finance

The Minister of Finance, Mr Seth Terkpeh in the 2014 Budget, stated that the current arrangements on distribution of petroleum receipts to allowable expenditures under the Petroleum Revenue Management Act did not augur well for aligning the receipts to national priority programmes.

He noted that certain provisions in the PRMA relating to the calculation of the Petroleum Benchmark Revenue and allocations to the Ghana Petroleum Funds (Ghana Stabilisation Fund and Ghana Heritage Fund) and Annual Budget Funding Amount were not clear.

He, therefore, proposed a review of the PRMA which would be presented to Parliament for approval in 2014.