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Petroleum revenue to state coffers last year still fell by almost GH¢400million despite the cut in government’s expectation by about two-thirds.
Government’s expectation for oil receipts has been weak as a result of the commodity’s supply glut on the world market, which forced Finance Minister Seth Terkper in mid-June last year to revise total petroleum receipts for 2015 to GH¢1.8billion compared with the 2015 budget estimate of GH¢4.2billion.
Yet a Bank of Ghana semi-annual report on Ghana’s Petroleum Holding Funds and Ghana Petroleum Funds for the last six months of 2015 show that the amount of money the country received from lifting crude oil and royalties and taxes amounted to US$174.23million, bringing the total receipts from petroleum trade for the year to US$387.82million — which at an exchange rate of GH¢3.64 to the dollar is 27 percent less than government’s target for the year.
The decline in the country’s earnings from petroleum activities has been pinned to the drop in oil prices, which as at December 2015 traded at US$30 a barrel.
The fall in oil prices also resulted in a sharp contraction of exports last year and a further widening of the current account deficit to US$793million in the third quarter of 2015, which has reduced the already low reserve buffer and triggered increased exchange rate pressures — and could further raise inflationary pressures and the cost of foreign debt service.
This year, government has lowered its expectation for oil revenue after the commodity’s price has — since reaching its peak of US$115 in 2014 — declined significantly on account of strong supply from members of the Organisation of the Petroleum Exporting Countries (OPEC) and the Islamic Republic of Iran’s nuclear deal, which has heightened expectation of excess supply on the market.
The government anticipates that total receipts from petroleum to the country will be GH¢2billion (US$502.10million), representing a 30 percent increase over the outturn for 2015.
But there are still concerns that slowing economic growth — especially in emerging markets, a crude oil supply glut, increases in global inventories, and the prospective impact of Iranian crude oil entering the market are expected to keep crude oil prices relatively low.
Brent crude price forecasts point to a range of US$50 to US$65 per barrel in 2016.
But Finance Minister Seth Terkper has adopted a crude oil price of US$53.05 per barrel for 2016 — in line with the forecasts by ICE/Bloomberg and the IMF’s World Economic Outlook, government’s traditional sources of Brent crude pricing data.
The ministry is of the view that a price of US$53.05 per barrel is more reflective of petroleum revenue inflows in 2016, compared to the higher market forecasts.
Ghana joined the league of oil exporting countries in December 2010, when the country began production of crude oil in commercial quantities.
So far, total lifting proceeds and other income allocated from inception to the end of December 2015 amounted to US$3.198billion. Annual Budget Funding Amount (ABFA) received a total of US$1.375billion representing 43% of the total revenue, while the Ghana National Petroleum Corporation (GNPC) received a total amount of US$968.81million…equivalent to 30% of total revenue. The Ghana Stabilisation Fund (GSF) and the Ghana Heritage Fund (GHF) each received an amount of US$604.36million (19%) and US$249.92million (8%) respectively.