The Public Interest and Accountability Committee (PIAC) launched its first annual report on petroleum revenue management on Thursday 17th May, 2012. The report was titled: “Report on Petroleum Revenue Management for 2011,” In line with our advocacy for accountability and transparency, we are serialising the report, starting from this edition.
The PIAC report begins with a foreword and acknowledgement section followed by an executive summary. For purposes of this publication, we have summarised these sections and under the heading Opening.”
The Public Interest and Accountability Committee (PIAC) is established under Section 51 of the Petroleum Revenue Management Act (Act 815) and was inaugurated on the 15th September 2011. It began meeting the following month.
The Committee has held several meetings since its inception including sessions with key players in the oil and gas industry. It received presentations from Tullow Oil PLC, as operator of the Jubilee oil fields, as well as from the Ministries of Energy and of Finance and Economic Planning. The Committee also met with officers from the Ghana Revenue Authority and the Ghana National Petroleum Corporation (GNPC).
The general impression after these meetings has been that these key players were making every effort to play their roles as required by law, as well as to meet the expectations of society. However, there were still gaps that need to be addressed. The first year of operations has been a good learning experience for all concerned and it is expected that a lot of progress should be made in the months and years ahead to build on this.
By publishing this report, the Committee is fulfilling its mandate as set out in section 56 of Act 815.
Meanwhile, the Committee has had to operate under very difficult conditions since the State has not provided any resources to it since its inception in September 2011. The Committee has relied thus far on an interim secretariat and funds provided by international organisations. It is working to secure financing for a working secretariat and for the implementation of its programmes and activities in 2012 and beyond.
The report explains the methods or modus deployed by the Committee to put together the report as follows:
In preparing this first report, the Committee solicited the support of consultants who worked together with the Committee’s own Technical Sub-Committee. The preparation of the report was done over the period February, May 2012. In writing this report, the PIAC sought to use, whenever feasible, primary data and information from major institutions whose roles, responsibilities and performance were subject to the operation of Act 815.
The data was gathered directly from the agencies, through a combination of questionnaires and face to face meetings. This was complemented by some additional desk research.
However, since this was the first report and there was no precedent to follow, information was not always readily available. In some cases this was due to the fact that the institutions themselves are going through new procedures or have only recently been set up, as is the case of the Investment Advisory Committee. The Committee therefore had to update the draft of the report on numerous occasions as additional information was gradually released from the institutions.
The Committee also found that the existing timelines which many institutions work by, to complete their accounting and recording for the previous year, did not allow for information to be available by the deadline for the publication of this Annual Report as given by Act 815 of 15th March. For example the contact person at the GRA was unable to provide some vital information on the cost data due to the fact that the data provided by the operator was still being audited. Furthermore, at GNPC we found that the annual accounts were yet to be audited and published.
The Committee therefore requires that the relevant institutions include the Public Interest and Accountability Committee on their distribution lists for reports and requests that information for future reports be provided in a timely manner and as a priority. In addition to the provision of timely information throughout the year, the Committee hopes this will enable it to better meet its reporting obligations in future.
Oil was discovered in commercial quantities off the coast of Ghana in June 2007. The country became one of Africa’s newest oil producers with the pouring of first oil from the Jubilee field in December 2010. The Jubilee field is reported to have 800 million barrels of proven reserves and an upside potential of about 3 billion barrels of oil. The government is expected to receive several billion dollars in new revenues over the next two decades and how these new revenues are managed will be vital to Ghana’s continuing development. Ghana has a chance to show that oil revenues can be managed and used in a transparent and accountable manner, and is seeking to avoid the resource curse as experienced in other oil-rich countries.
Ghanaians are hopeful that they will be able to avoid some of the problems related to the sudden onset of oil wealth, such as increased corruption, increased debt, Dutch Disease effects, and competition and conflict over resource revenues. Local and international observers have raised a word of caution that Ghana’s enviable track record of economic, social and democratic development over the last 20 years may be affected by the challenges posed by the oil find. The primary essence of the creation of the Public Interest and Accountability Committee (PIAC) established under the Petroleum Revenue Management Act, 2011, Act 815 (hereafter referred to as Act 815) was to ensure successful utilisation of proceeds from oil and gas exploitation to secure the greatest social and economic benefit for the people of Ghana. This requires Government Accountability to an Informed Public. Ideally, all policies and laws concerning the oil and gas industry should have been formulated before commencement of oil production, especially in regards to the management of petroleum revenues. Oil production started in December 2010 prior to the passage of Act 815.