Business News of 2014-08-09

PIAC worried about interpretation of Petroleum Act

The Public Interest and Accountability Committee (PIAC) has expressed concern over the manner in which the Petroleum Revenue Management Act (PRMA), 2011 (Act 815) has been interpreted to justify transfers of money from the Ghana Stabilisation Fund (GSF).

The GSF has been earmarked to be a back-up for the annual budget in times of petroleum revenue shortfalls.

A statement signed and issued in Accra by the Chairman of the Communication Sub-Committee, Mr Yaw Owusu Addo, said media reports in May 2014 which were consequently confirmed by the Minister of Finance in his statement to Parliament during the presentation of the supplementary budget in July 2014 indicated that GSF had been capped at $250 million in tandem with section 23 (3) of the PRMA.

The statement quoted the Minister of Finance as saying “as of May 2014, an excess of $176 million had been realised. Out of this amount, $16 million was lodged into the newly established Contingency Fund and the difference of $159 million being used for debt repayment.”

According to the statement, the PIAC has investigated the minister’s statement and wish to “state that even though section 23 (3) of the PRMA empowers the minister to recommend for the approval of Parliament, a cap on the Ghana Stabilisation Fund had already exceeded the cap of $250 million.”

It said the approval of Parliament ought to have been sought before any disbursement of the excess amount from the GSF.

According to the statement, the approval of the budget for the Ministry of Finance was for the specific or finite amounts that were estimated to be released to ministries and departments to carry out government business for the year.

The statement said in the case of the GSF, Parliament was not informed about the amount that was expected to be in excess and therefore specific approval was required before the amount could be moved out of the GSF, taking into account the provision of Section 12 (5) of the PRMA.

It said Section 12 (5) of the PRMA states that “transfer out of the Ghana Stabilisation Fund shall only be done for the purpose of alleviating shortfalls in actual petroleum revenue…," adding that the condition precedent prescribed in Subsection 12(5) did not exist to warrant the withdrawal.

The statement argued that in the opinion of the PIAC, the amount that should have been transferred from the GSF must be limited to US$107,457,183.71 which was the difference between the existing balance at the end of 2013, thus US$319,034,153.16 and the amount of US$426,491,336.87 accumulated at the time of the minister’s instruction to the Bank of Ghana through the Controller and Accountant General’s Department.

It said consequently, it was the view of the PIAC that the cap must be reviewed to the original US$319,034,153.16, which was the amount in the GSF at the beginning of 2014, by restoring the amount of US$69,034,153.16 from subsequent proceeds of liftings in the second half of 2014.

It said it was the wish of the PIAC to state that the GSF was a back-up for the Annual Budget Funding Amount (ABFA) in the event of petroleum revenue shortfalls.

The statement said the government should, therefore, apply the rules and go by the procedures established by law to gain access to the fund through the people’s representatives in Parliament.

The statement said any serious understatement of expected revenue led to under-allocation to the ABFA and subsequently more funds into the GSF and GHF.

It said an overstatement of the Benchmark Revenue was equally undesirable as it would also result in the under-funding of the two funds, the GSF and the GHF.

Source: graphic.com.gh
« Previous | Next »
View Comments
Sponsor Links
News Categories
Site Menu