Prof Asafu Adjaye
Professor John Asafu-Adjaye, a senior economist at the Institute of Economic Affairs (IEA), has called on current and future governments to equip the country’s mining sector in order to derive expected benefits.
Prof Asafu-Adjaye was presenting a report on the management of Ghana’s oil and gas revenue for 2011 at a roundtable discussion recently in Accra.
According to him, though Ghana’s discovery of oil and gas resources posed a unique opportunity, the governance of the resources were crucial for ensuring that revenues were utilized to the benefits of current and future generations.
“In this regard, the IEA believes that one way to promote transparency and accountability in the sector is by making freely available to the public about activities in the sector.”
The IEA Petroleum Revenue and Accountability Tracking Index (P-TRAC Index) is an initiative of the Institute of Economic Affairs aimed at promoting transparency and accountability in the management of Ghana’s newly-discovered oil and gas resources and to enhance the level of responsibility on the part of the policy makers.
“Transparency has a number of benefits. Increased transparency is associated with lower corruption levels and improved levels of socio-economic and human development indicators.
The data for constructing the P-TRAC Index were collected with the aid of detailed questionnaire which distinguishes four key components of the governance of Ghana’s oil and gas resources.
These are Revenue transparency, Expenditure transparency, Contract transparency and transparency in the management of oil and gas funds.
He said the average score for revenue transparency was 64.3 percent which suggested that in relation to achieving transparency and accountability in managing the oil and gas revenue, there was considerable room for improvement.
“For example, there is the need to introduce further enabling legislation and to provide adequate resources to government bodies charged with monitoring the oil and gas revenues. The average score for Expenditure Transparency was 63.9 percent. This score was affected by the low score on frequency and reporting while the average score for Contract Transparency was 66.75 percent.”
Prof Asafu-Adjaye said there are a number of areas where improvements are required. These include more public disclosure of information on contracts, including negotiated terms for exploration and production, as well as the licensing process. There is also the need for transparency in the assessment of contracts, including allowance for an appeal process.
“The average score for Oil Transparency was 44 percent. This is the lowest score of the four components of the index, which indicates that a lot need to be done in terms of increasing transparency in the reporting of the management of the funds.
The overall 2011 score for transparency in the oil and gas industry came to 59.7 percent. Some progress has been made in the past year to enhance transparency in the management of Ghana’s oil and gas resources. However, our study reveals a number of areas where further improvements can be made to raise the level of transparency and accountability.
“Although there is no constitutional mandate for agencies such as the Ministry of Energy, Ghana National Petroleum Commission, and the Ghana Revenue Authority to publish information , (e.g. prices , volumes , productions, costs, taxes) on the oil and gas websites, we strongly recommend frequent publication of information by all line agencies to enhance transparency and accountability.
Ghana’s oil and gas resources provide a great opportunity for the country’s development. Yet despite the opportunities presented by the estimated GH¢1billion per annum in revenues that will accrue to the country, the management of this new wealth presents significant challenges.
By Samuel Boadi
