Reconsider benchmark formula for oil revenue – ACEP charges government

African Center for Energy Policy, ACEP, is urging government to reconsider the benchmark formula its uses in calculating the annual projected oil revenue which forms weighty basis for government budgeting.

Speaking at a round table forum held at Mensvic hotel in Accra, Deputy Executive Director for ACEP, Benjamin Boakye argued that the 7-year moving average which is used by governments to estimate the expected revenue from the oil industry has over the years deviated substantially from the actualized revenue, a situation he described as ‘failing Ghanaians’

‘…The trend has been similar using our formulae to calculate our expectation or our benchmark revenue for the year. It has either been over optimistic or pessimistic, which tells you that the formulae is failing us, If you check 2014, expected was 776million dollars but we had over 200million dollar extra. 2015 was a disaster, the initial estimate was about 1.2billion dollars but we had 396 million dollars. 2016 we also had a shortfall ’

The petroleum revenue management law which enforced the establishment of the Ghana Stabilization fund as buffer to cushion the budget in times like this has been depleted with a constant recapping by the previous government Benjamin Boakye noted.

‘Because of the fiscal challenges we have had as country, government is unable to save into the Ghana stabilization fund. The cap is still at the 100 million dollars. The buffer in the Ghana stabilization fund will not be enough for sustain the budget.’ He said.

Speaking on the Annual Budget Funding Amount (ABFA), ACEP charged government to outline the specific priority areas the ABFA will be spent on for the 2017 to 2019 priority window.

According to Mr. Boakye, enlisting the priority areas will enhance tracking of the intended projects to be implemented.

Special energy tax cut insignificant

Executive Director for KITE, a leading actor in the energy, technology and environment sector has also described the 2.5% tax cut on energy levy especially for consumers in the non-special low tariff category as woefully inadequate to give the intended positive relief.

Speaking on the power sector at roundtable forum organized by ACEP, Mr. Ishmael Edjekumhene, noted that most operators of small and medium scale businesses in the non-residential category have argued that it is worth while running a generator set to power their business

‘With the tax relieves, for residential customers, is may be enough… but if you look non-residential which is the non-special low tariff category, they actually have a higher tariff and in fact if you look at the energy commission’s energy outlook for 2017, it state clearly that, that category of customers noted that it’s sometimes cheaper to run on a generator set’ Mr. Edjekumhene said.