Govt blows GH¢260m oil money

Energy experts have questioned government’s management of Ghana’s petroleum revenues, especially allocations made to capacity building in the sector.

This follows revelations by the Public Interest and Accountability Committee (PIAC) in its 2015 report that oil monies were diverted into various social interventions in the name of capacity building.

According to PIAC, “Cumulatively, only 3.25 per cent (GH¢8.93million) of the GH¢274.94million allocated from the Annual Budget Funding Amount (ABFA) to capacity building from 2011 to 2015 was used to directly build capacity in the oil and gas sector.”

This means that GH¢266million has since 2011 been spent supposedly on building capacity in sectors other than the oil and gas sector.

The report revealed for instance that for 2015 alone, an amount of GH¢556,655.18 from the total of GH¢142.07million allocated to Capacity-Building was used for the printing and transportation of teachers’ notebooks and class attendance registers to district depots in seven regions of the country.

PIAC found out that GH¢45.10million was used in “paying second term claims to the Ministry of Education to improve capacity at the Primary and Secondary School Level” while an amount of GH¢23.53 million was used to offset feeding costs for Colleges of Education and Institutions of the handicapped.

Further, still captured under capacity building, GH¢34.56million from the ABFA was used to settle Senior High School subsidies and fund the implementation of government’s progressively free secondary education programme (), payment of Basic Education Certificate Examinations (B.E.C.E.) subsidy for the 2015 examination (GH¢15.54 million), payment of capitation grant for third term 2013/2014 and first term 2014/2015 academic years (GH¢16.65million) and the supply of school uniforms for basic schools in four regions and deprived districts (GH¢3.89 million).

Business Finder’s checks show that the Finance Minister, Mr Seth Terkper in his submission of the 2015 annual report on petroleum funds to Parliament last year admitted that spending in the capacity building area was geared towards “improving the capacity of teachers across the country, supply of teaching and learning materials to basic and secondary schools, feeding and capitation grant, BECE and SHS subsidy for 2015 examinations and scholarships for advanced learning including oil and gas training.”

This shows that capacity building in the oil and gas sector has received very little attention, against government’s own efforts to give meaning to provisions contained in Ghana’s local content law.

Head of Policy Unit at the Africa Centre for Energy Policy (ACEP), Dr Ishmael Ackah regretted that the misuse of oil funds come at a time when there is skills gaps in the oil and gas sector which need to be identified and addressed.

“A skills gap analysis would tell us that in the next five years, we will need 100 petroleum engineers, 50 geo-scientists, 50 geologists or 100 petroleum accountants so that based on that we can budget for them and weigh the options of either training them in-country or overseas,” he observed.

Dr Ackah reminded government that there were accredited institutions in Ghana that could train more students at lower cost to meet the skill demands of the sector.

“When you send one person overseas on government scholarship to study oil and gas management, you will spend about £25,000; meanwhile this amount can train about seven people at the Oil and Gas Institute at the University of Cape Coast.

He reckoned the efforts of institutions such as Tullow and the Ghana National Petroleum Corporation (GNPC) in building the capacity of Ghanaians through the sponsorship of students to study oil and gas courses but noted that those efforts were not coordinated.

According to him, the capacity building allocation in the ABFA had lost its relevance; it had been turned into a category under which everything conceivable is bundled.

“Allocating oil monies to the payment of BECE subsidies makes monitoring very difficult because we cannot verify how those subsidies were paid,” he said.

He blamed the development on the fact that from the very onset in 2011, when Ghana commenced production of oil in commercial quantities “we did not define capacity building.”

The Chairman of PIAC, Prof Buah-Bassuah said the Committee had recommended among other things, the urgent need for a proper definition of what constitutes capacity building “so as to ensure that funds expended on that priority area go to build real capacity in the chosen sectors of the economy.”

The Committee’s latest recommendations flow directly from earlier observations made in its 2013 annual report to the effect that the Capacity Building Priority Area had become an ‘amorphous and ambiguous’ category under which everything conceivable could be bundled.

Prof Buah-Bassuah said it was important for targeted allocations to be made to fund direct capacity enhancing initiatives in the oil and gas sector to help bolster indigenous expertise and know-how in the industry as stipulated in the local content regulations.

Chairman of the Civil Society Platform on Oil and Gas, Dr Steve Manteaw lamented the absence of value addition in the oil and gas sector due to the diversion of funds meant for capacity building into other sectors.