The Public Interest and Accountability Committee (PIAC), established under the Petroleum Revenue Management Act 815 and mandated to monitor the use of the oil and gas revenue, made public its maiden report in Accra yesterday. The Chairman of PIAC, Major Daniel Ablorh-Quarcoo (rtd), noted that all institutions responsible for the management of the revenue accrued from the oil find discharged themselves well, except for the fact that there were certain ambiguities with the law that guided their operations, hence the need for an amendment. According to Major Quarcoo, the key findings of the PIAC were that the 2011 government budget contained projections for the oil revenue although the act and laws for the management of revenue were not in place. These had to be revised, leading to a delay in monitoring. He disclosed that total oil lifting for the 2011 was 3,930.189 barrels representing 16.1% as against the estimated 18% while actual revenue generated was GHC666,187.085.6 billion as against the projected GHC1,250,000,000 billion . In respect of revenue disbursement, the Ghana National Petroleum Corporation (GNPC) received GHC315, 390,698 million, representing 47% of total government oil receipts. GNPC, he revealed, was yet to account for this amount as their audited account was not ready as at the time of launching the report yesterday.
The Ghana Petroleum Fund received GHC103, 808, 031.7 million which was shared between the Heritage Fund and the Stabilization Fund. The Heritage Fund was credited with GHC21, 799,687.00 million while GHC 82,008,345.00 went into the Stabilization Fund. The committee observed that the Stabilization Fund had received GHC 9,000,000 million in excess, an amount which should have gone into the Heritage Fund.
The Committee also observed there were no clear roles for the institutions involved in the management of the oil revenue. The delay in establishing agencies and procedures under the Act for the management of the resources also accounted for the delay in report. It also pointed out that the absence of regulatory laws needed to facilitate the work of the respective agencies. Major Quarcoo revealed that the regulatory law was in the daft stage, indicating it would be ready by the end of the year.
In determining Benchmark Revenue, the Committee said, government used conservative estimates based on international crude oil prices presumably, since there was no data as yet for the jubilee field.
Again, the enactment of Act 815 mid-year also accounted for the determination of Benchmark Revenue in July 2011 during the presentation of the supplementary budget for 2011, thereby revising the first projection of petroleum revenue for the year as estimated in November 2010 prior to the passage of the law. The late determination of the Benchmark revenue was therefore done as a special case considering the operational challenge of Act 815 in its first year of implementation.
Ghana?s lifting of crude oil was consistent with the Petroleum Agreements, reflecting a royalty of 5% of gross production and carried a participating interest of 13.75% of net production. Lifting of crude oil in 2011 spilled-over into 2012 in accumulated stocks of 649.138 barrels of oil being about 2% of total Ghana share for 2011. The accumulated stock by the end f December 2011 was not lifted until 3rd January, 2012. This translated into revenue overspill of US$72,463,275 million (at the realized crude oil price of (US$111.63 per barrel). Crude oil lifting are done in parcels of around 950,000 barrels per lifting and the variance of 265,224 barrel taken on the 3rd January should be regarded as Ghana?s share of production in the first quarter of 2012.
Some of the recommendations made by PIAC included the passage of a law that would take care of situations such as spill-over, and the admonition to the Ministry of Finance to abide by the law governing the management of the petroleum revenue.
The committee also entreated government to formulate a National Development Plan which would serve as a guide to all parties relative to disbursement of oil revenue for the benefit of all of Ghanaians. It also encouraged the Ministry of Finance to sign operational management agreement with the Bank of Ghana for the operational management of the Ghana Petroleum Fund. The Ministry of Finance was also asked to amend the laws with ambiguities to allow for clarity. In addition, PIAC also called on government to resource institutions with responsibilities under the Act 815 for effective delivery.