PIAC urges long-term national development plan for strategic allocation of oil revenues

The Public Interest and Accountability Committee (PIAC) has reiterated its stance on the allocation of oil revenues for development purposes to be guided by a long-term national development plan.

This plan, according to PIAC, should be approved by parliament in line with the Petroleum Revenue Management Act (PRMA).

The PRMA 2011 (Act 815), as amended, enjoins the finance minister to select no more than four areas – of the 12 specified Priority Areas – when submitting a programme of activities for use of petroleum revenue under the Annual Budget Funding Amount (ABFA).

Priority Areas are to be reviewed every three years after the initial prioritisation, with the approval of parliament. Selecting Priority Areas every three years has become necessary because of the absence of a long-term national development plan.

For instance, on expiry of the Priority Areas for 2020 to 2022, new Priority Areas were selected for the utilisation of the ABFA for the period 2023 to 2025.

But, “Since the PRMA’s coming into force in 2011, use of the ABFA has been guided by a medium-term development strategy without a long-term national development plan approved by parliament,” PIAC’s 2023 Annual Report stated.

It is in line with this that the Committee emphasised a need for the ABFA Priority Areas to be selected based on the proposed development plan, which it believes will ensure more strategic and effective use of the country’s oil revenues.

This comes on the back of actual petroleum receipts totalling US$1.1billion being paid into the Petroleum Holding Fund (PHF) for the 2023 year under review. This amount was distributed with Ghana National Petroleum Corporation (GNPC) receiving US$245.5million; ABFA, US$485.9million; and the Ghana Petroleum Funds (GPFs) getting US$330.5million.

Also, according to the Committee’s findings for the year under review, the amount ABFA disbursed to support the Agenda 111 project was GH¢758.9million. This brings the ABFA total contribution to the project to GH¢1.7billion – amounting to 65.24 percent of total spending on the project, which is GH¢2.6billion.

Furthermore, it was revealed that allocation and disbursements of ABFA to the Industrialisation Priority Area has reduced from 1.15 percent in 2020 to 0.11 percent in 2023, which the Committee says “undermines the essence of prioritisation”.

The Committee therefore urged the Ministry of Finance to demonstrate the essence of prioritisation by the amount the ABFA disbursed to the Industrialisation Priority Area.

On a progressive note, the Committee also disclosed that an amount of GH¢270.9million, representing 5 percent of the 2023 ABFA, was disbursed to the District Assembly Common Fund (DACF) in compliance with the Supreme Court of Ghana’s decision in the case of Kpodo and Another vrs Attorney General in 2019, to transfer at least 5 percent of the ABFA to the Fund.

However, while commending the Ministry of Finance, for disbursing 5 percent of the ABFA to the DACF, the Committee urged them to ensure that subsequent disbursements meet the minimum requirements of 5 percent of the ABFA.

“About 54 percent of the ABFA disbursed to the District Assemblies Common Fund was used for Goods and Services (recurrent expenditure), contrary to Section 21(4)(a) of the PRMA, as amended, which provides that not more than 30 percent of the ABFA shall be used for Goods and Services,” the Committee added.

In view this, it also asked the Finance Ministry to ensure that the ABFA disbursed to DACF is utilised in accordance with provisions of the PRMA.