Departing Managing Director of Tullow Ghana, Kweku Awotwi, has cautioned government faces a huge task in curtailing oil revenue shortfalls due to the impact of the coronavirus.
This follows Ghana losing out on its projected oil revenue generation following the drop and limited demand for crude oil on the international market.
Speaking in an interview with Citi Business News, Kweku Awotwi who is also departing his role as Executive Vice President of Tullow Oil PLC., said “Ghana like everybody in the industry is feeling the pain of reduced prices. The oil industry as a whole has been sucked up. The initial expenditures are really in our capital program product where you spend the most money but there is a big revenue gap”
“At the beginning of the year, I believe we thought the price of oil would be around US$60, today its US$30. So, anyone who is counting on the oil revenue immediately faces a deficit of US$30 dollars. That is a huge gap in revenue so it affects all of us. But from a country point of view, if we were depending on those funds or helping us keep our budget or maintain our budget, the government has a huge task to reach the gap that has come about. All I say is that these things tend to be cyclical”
“Today it’s slow, at some point it will go up again. But how long that takes and where that goes, nobody can really tell, but it’s not going to stay at US$30 forever. But for now, these things are really challenging for Ghana and other countries,” Mr Awotwi stressed.
Earlier, Finance Minister, Ken Ofori-Atta, in his 2020 Budget statement projected Ghana’s oil revenue at US$8.9 billion from about 13 percent of total revenue and grants.
But as a result of the coronavirus pandemic, oil prices globally have tumbled from almost US$60 dollars to nearly US$30 dollars a barrel thereby upsetting economic growth and creating a surplus in oil supply.
For the international market, oil prices which was stood at US$66.25 per barrel at the start of the 2020 New Year, had dropped sharply to US$26 per barrel as of March 21, 2020.