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Experts debates on Government diverts of oil revenue

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Oil revenues earmarked for building capacity in the oil and gas industry between 2011 and 2013 were diverted into other areas other than its intended purpose.

Capacity building is one of the four priority areas under which government is expected to utilise oil revenue from the Annual Budget Funding Amount (ABFA).

This category, however, appears to be a category under which certain expenditure items which may not be related to capacity building have been classified.

Approximately GH¢23 million or 17 per cent of ABFA earmarked for capacity building from 2011 to 2013 went into consumables such as goods and services for Ministry of Food and Agriculture, Ministry of Lands and Natural Resources and the National Disaster Management Organisation (NADMO) relief items.

Again, GH¢2 million was used to support the creative industry while another GH¢8.1 million was given out as cash transfer under the Livelihood Enhancement Against Poverty (LEAP) programme.

Also, GH¢35 million was allocated to Microfinance and Small Loans Centre (MASLOC) while another GH¢19 million has been used to set up the Venture Capital Fund and the Eximguranty fund.

In spite of these, only GH¢8.93 million representing 6.7 per cent of the total allocations to the capacity building priority area has gone into developing capacity in the oil and gas sector over the three-year period between 2011 and 2013.

However, a member of the Public Interest and Accountability Committee (PIAC), a statutory organisation set up to  monitor and independently assess government’s management of the oil and gas revenues, Mr Yaw Owusu Addo, has described the trend  as worrying.

According to him, the committee found out that in 2013, the Petroleum Commission received support of GH¢8.18 million out of funds earmarked for capacity building.

At an oil and gas reporting training for financial journalists, Mr Owusu Addo, who is the Ghana Journalists Association Representative on PIAC, said, “Extractive resources must not be treated as regular income. If misapplied, it calls for worry.  Those who have nothing to do with the sector are rather benefiting from it.”

The training programme was organised by the Institute of Financial and Economic Journalists (IFEJ) in partnership with GIZ and SECO to equip participants with relevant knowledge on the country’s oil and gas sector to inform their reportage.

The Executive Director of the Africa Centre for Energy Policy (ACEP), Dr Mohammed Amin Adam, also expressed worry over the failure of government to fully utilise the allocated funds for the capacity-building programme especially at a time that more experts were required in the sector.

He said expertise was required in areas such as welding and finishing and it was, therefore, imperative that people were taught and trained on how to do those things.

Dr Adam, therefore, suggested that government focused its expenditure under the capacity building priority area on interventions that would directly enhance the capacity and capabilities of Ghanaians to play a bigger role in the emerging oil and gas industry.

Priority areas

The Minister of Finance is expected to announce four priority areas in the budget statement on which government would spend its oil revenues from the ABFA.

In 2013 alone, the ABFA was allocated to the four priority areas; agriculture modernisation with an allocation of GH¢13.60 million, roads and other infrastructure with GH¢372.07, amortisation of loans for energy sector GH¢137.92 million and GH¢20.18 million on capacity building.

Interestingly, the annual report published by PIAC indicated that in 2013, GH¢10 million was spent as financial support to Venture Capital Fund, another GH¢2 million was used on the Exim Guarantee Fund and the Petroleum Commission received support of GH¢8.1 million, hence no single fund went into a project that could be classified as capacity building.

Role of PIAC

PIAC was established under the Petroleum Revenue Management (PRMA) Act 2011, ACT 815 to monitor and evaluate compliance with the Act by the government and other relevant institutions in the management and use of petroleum revenues.

The committee is also expected to provide a platform for public debate on spending prospects of petroleum revenues in line with development priorities and to also provide an independent assessment of the management and use of oil revenues.

Dr Amin Adam, however, explained that PIAC had failed to highlight issues of non-compliance with sections of the PRMA in its report although there were several cases of them in 2013.

“PIAC’s mandate requires it to monitor compliance with the PRMA as provided for in Section 52a. However, the report does not express cases of non-compliance with the law although there are several of them in the year under review,” he said.

PIAC, he also said, was unable to carry out its independent assessment role of the uses of petroleum revenues as it depends on data from government sources to carry out the report.

Source: Daily Graphic

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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