petroleum revenue
oil money

Government of Ghana will prioritized its spending of petroleum revenue going forward to ensure maximized benefit to citizens, a senior policy advisor told Xinhua here on Friday.

The Petroleum Revenue Management Act (PRMA) mandates the Minister for Finance to select five priority areas for financing by the Annual Budget Funding Amount (ABFA) component of petroleum in the absence of a long tern national development plan.

However Ishmael Ackah , Senior Technical Advisor to the Ministry of Planning, argued that the experience since 2011 has shown that even within these priority areas, there should be proper targeting.

Ghana started commercial oil production in December 2010 but citizens wonder what tangible development project had been undertaken with oil funds, besides the China Development Bank (CDB) funded Ghana Gas Processing plant at Atuabo near Takoradi, 318 km west of the capital.

“Proper planning was what we did not have in our quest to develop the country using petroleum revenue. There should be proper targeting even within the priority areas, instead of just spending on everything within those priority areas is the way we are going now,” the petroleum economist told Xinhua.

In the interview after a day’s policy dialogue on the theme; “The National Vision; Petroleum Revenue Management and the Non-State Actor; An Inclusive Growth Agenda” the official added that there should also be proper estimations done for projects to be funded with ABFA.

This, Ackah said was crucial due to the volatile nature of oil prices on the world stage; “so that for instance when we are doing Free Senior High School, should oil prices fall again next year we would have estimated how much revenue losses to expect so that alternative financing sources are secured for it.”

Responding to concerns of expenditure over-runs for oil money funded projects the economist said government would also strengthen the monitoring process for the sector in order to ensure value-for-money in all such expenditure.

Furthermore the Technical Advisor said there was the need for a skills audit of the sector to understand the skills gap so that part of the revenue could be used to strengthen capacities of the country’s polytechnics and universities which can then train students in these necessary skills areas.

Petroleum revenue accounts for about 7.5 percent of the annual revenue of the West African country whose economy grew by 8.5 percent last year fired by high performance of the oil sector, following an abysmal 3.7 percent growth in 2016.

In his assessment of the sector, Kwabena Nyarko Ottoo, Director of Labor Research for Ghana Trades Union Congress (Ghana TUC) pointed out that Ghana may have experienced a resource shock with about 3.4 billion US Dollars flowing into the economy between 2011 and 2016.

“With that kind of inflow, did we have the capacity to utilize all of that?,” he wondered.

Nyarko Ottoo who is the TUC representative on oversight body, Public Interest and Accountability Committee (PIAC) urged that due to the capacity issues, the portion of the oil revenue being saved in the Ghana Heritage Finds need to be managed such that intergenerational equity, while ensuring transparency and accountability in current spending. Enditem

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