No fiscal policy direction for Ghana’s oil

- Revenue Watch Institute

New York based Revenue Watch Institute (RWI) has bemoaned the fact that with barely a year to commence commercial oil production off its West Coast, Ghana is yet to put in place a clear policy direction as to how expected oil revenues would be distributed and utilized.

Emmanuel Kuyole, Africa Regional Coordinator for RWI said the country has neither overhauled the agencies charged with overseeing the industry nor published policies on how the discoveries would be used to benefit the country.

Mr Kuyole’s comments highlights pressure in Ghana and outside for government action to help the country escape the so-called “paradox of plenty”, that has left many other resource-rich countries in the grip of graft and mass poverty.

According to him, even though the Ghana has stated clearly its intention to avoid the fate of Nigeria and other troubled resource regions by setting out modalities, before the commencement of commercial oil production for royalties, dividends, corporate taxes and other levies, not much has been achieved in that direction.

Speaking at a training workshop for members of the Institute of Financial and Economic Journalist (IFEJ) in Accra last Friday, Mr Kuyole explained that current projections by the German Technical Coorporation indicates that Ghana could reap as much as US$ 25 billion over the projected 25 year life span of the Jubilee oil field, for which reason prudent strategies are required ahead of time to ensure such revenues are well utilised.

He expressed concern about the fact that $27 million of annual receipts from the country’s minerals resources had not impacted much on the livelihood of the citizenry since independence, calling for definitive actions to forestall a similar situation with the entry of oil set to generate $1billion in annual revenue.

According to him, even though the past government worked out a draft oil policy, it is far from being a complete document as the current government has made known its intension to revise most portions of the text.

Citing an instance, he said the decision to set up a new National Petroleum Authority to be in charge of oversight responsibility, with the existing Ghana National Petroleum Corporation (GNPC) concentrating on its core duties has been, neglected, with the Mills’ Administration seeking to strengthen the GNPC for additional responsibility.

Another major concern Mr Kuyole raised was the fact that only a model contract document between government and the Oil companies has been made public, saying that this posed a threat when it comes to issues of transparency.

He called for broader participation in issues relating to the expected oil revenues to ensure that such resources were used judiciously.

To him, a more comprehensive oil policy document could work to ensure that the oil industry is well integrated with other sectors of the economy and satisfy the demand for local content.

Credit: Financial Intelligence

(Charles K. Amoah and Ebenezer Asare)