Business News of 2014-06-13

Gov’t denies misapplying petroleum funds

The Ministry of Finance has stated that its management of petroleum revenues has been in accordance with the Petroleum Revenue Management Act (PRMA) and that it accepts the challenge by a civil society organisation for an investigation into the matter.

A civil society body with interest in the energy sector, Africa Centre for Energy Policy (ACEP), accused the government, particularly the Ministry of Finance, of misusing the remainder of funds after transfers to the Ghana Stabilisation Fund (GSF) had exceeded its cap.

The allegation has gained currency with the opposition New Patriotic Party also repeating the same claims at a press conference last week. In a statement signed by the Deputy Minister of Finance, Mr Cassiel Ato Forson, and made available to the Daily Graphic, the Ministry of Finance said the Bank of Ghana had established the Contingency Fund with an amount of GH?50 million drawn from the excess over the cap on the GSF.

“The fact that the Contingency Fund exists today with a balance of GH?50 million testifies to the fact that no moneys have been spent from it. This defeats ACEP’s claim that the excess amount over the GSF cap never reached the Contingency Fund since the Contingency Fund was first established in May 14, 2014, with the GH?50 million,” the ministry said in a statement issued by its Public Relations Unit.

It further explained that the remaining amount had been deposited into the Debt Service Account for debt repayment and that due process would be followed before the use of the money.

“It is very inaccurate for ACEP to suggest that the US$176.49 million, which represents the excess over the cap on the GSF as of end-March 2014, has been used by government to close its financing gap. It is also untrue that Parliament’s powers have been usurped and the constitution violated,” the statement denied.

It added; “We, therefore, accept the challenge by ACEP for an investigation to be carried out on the use of the excess funds over the GSF cap in order to put this matter to rest.”

Balance in GSF account by end-March

The ministry explained that the balance in the GSF as of end-December 2013, stood at US$319,034,153.16, and captured in the 2013 Reconciliation Report on the Petroleum Holding Fund, available on the ministry’s website (www.mofep.gov.gh).

In the first quarter of 2014, a total of US$107,457,183.71 accrued to the GSF, bringing the total GSF balance as of March 31, 2014, to US$426,491,336.87, the ministry said. Given the GSF cap of US$250 million, the excess over the cap at end-March 2014 was US$176,491,336.87.

Response to ACEP’s claims

“The fact that the Contingency Fund exists today with a balance of GH¢50 million testifies to the fact that no moneys have been spent from it. This defeats ACEP’s claim that the excess amount over the GSF cap never reached the Contingency Fund since the Contingency Fund was first established in May 14, 2014 with the GH¢50 million,” the statement said.

It said due process would be followed before the remaining amount deposited into the Debt Service Account for debt repayment would be used. The finance minister categorically stated that it was “very inaccurate for ACEP to suggest that the US$176.49 million, which represents the excess over the cap on the GSF as of end-March 2014, has been used by government to close its financing gap.” “It is also untrue that Parliament’s powers have been usurped and the constitution violated,” the statement stressed.

The Cap on GSF and transfer

Section 23(3) of the PRMA states that: “The accumulated resources of the Ghana Stabilisation Fund shall not exceed an amount recommended by the Minister and approved by Parliament and the amount shall be reviewed from time to time as necessitated by macroeconomic conditions.”

Section 23(4) of the PRMA also states that once the cap is attained “… subsequent transfers into the Ghana Stabilisation Fund shall be allocated as transfers into the Contingency Fund or for debt repayment approved by Parliament.”

At paragraph 972 of the 2014 Budget Statement and Economic Policy, the government proposed to cap the GSF at US$250 million in line with Section 23(3) of the PRMA; and to use the excess (over the cap) for debt repayment and to establish the Contingency Fund, as proposed in the Constitution of Ghana.

Charge to stakeholders

The ministry used the opportunity to appeal to other stakeholders to research well and verify matters of public interest to help educate the public, rather than peddling untruths which require public officials to spend precious time to rebut. The finance ministry categorically said ACEP should have consulted it on the matter before rushing to the press.