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PIAC report reveals $222 million ‘swept’ from budget funding account

  • SOURCE: | Editor
  • maxresdefault (1)The Public Interest and Accountability Committee (PIAC) has revealed $222 million was “swept” from the Annual Budget Funding Account (ABFA) by the Bank of Ghana.

    The 2015 Semi-Annual Report released by the committee created by an Act of Parliament also revealed the country’s proceeds from oil fields has decreased by over 50% for the first half of 2015.

    The country also lost revenue from gas due to the debts owed by the Volta River Authority (VRA), according to the report.

    According to the report, total petroleum receipts during the first half of the year was $274.47 million compared to US$562.48 million received during the same period in the preceding year, representing a 56% decline in revenue.

    The significant decline in revenues was attributable to a sharp decline in global crude oil prices which affected all sources of petroleum revenues, especially CIT.

    Also, no revenue was generated from the gas sector even though 10,606 mmBTU of wet gas valued at $32.60 million was evacuated to the Atuabo Gas Processing Plant. This receivable, payable by Ghana National Gas Company (GNGC), represents approximately 77% of revenue expected from gas during the period.

    This means that the revenue shortfall encountered during the first half of the year would have been six percentage points lower, had GNGC honored its financial obligations to GNPC.

    GNGC or had not paid GNPC because VRA, the main off-taker of lean gas is indebted to the company up to the tune of $103.63 million as at the end of June, 2015.

    The report further revealed that an amount of US $56.69 million was withdrawn from the GSF to compensate for a shortfall in the projected quarterly ABFA for Quarter 1. This is the first time such a withdrawal has been made from the GSF for this purpose since the coming into force of the Petroleum Revenue Management Act (PRMA).

    However, PIAC is of the view that this withdrawal from the GSF may not have been necessary if the closing balance of the ABFA Account at the end of 2014 of $222.93 million (or GH¢666.06 million), had not been swept by the BoG in assessing the government of Ghana’s financial position for 2014 financial year.

    Moreover, a surface rental bill of $67,438.36 dating back to February 2013 payable by Oranto/Stone Energy remains outstanding.

    Surprisingly, there was no record of it in the BoG half year report even though the payment did not reflect in the list of Surface Rentals paid in the first half of 2015. No royalties were paid from the Saltpond Oilfield even though 25,453 barrels of oil were lifted from the fields during the period under review.

    The Committee has found that a minimum of US$ 37,129 being 3% of revenues ought to have been paid by Saltpond Oil Production Company Limietd (SOPCL) as royalties to the state.

    The Ministry of Finance explained that no royalties were paid by SOPCL because it had been informed by GNPC that SOPCL has ceased operation during the period under review whereas SOPCL reported production of 25,453 barrels of oil in the second quarter of 2015.


    Following the revelations in the report, PIAC has offered the following recommendations; The $222.93 million (GH¢666.06 million) that was swept by the BoG should be refunded to ABFA account as soon as practicable, just as 30% of the Sinking Fund of the US$ 100 million that was also swept, was restored by the BoG.

    This would help prevent further withdrawal from the GSF in 2015. It is also important to stress that the non-refund of the outstanding balance together with the remaining $70 million of the swept sinking fund would be tantamount to a violation of the PRMA Also, immediate steps must be taken by the GRA and/or BoG to compel SOPCL to pay any outstanding royalties that had fallen due to the State prior to the suspension of its operations.

    In the same vein, Oranto/Stone Energy must be compelled to pay the outstanding surface rental invoice that has been pending since February 2013 with accumulated interest In addition, the Government of Ghana should endeavour to pay the $50 million special advance given to it by GNPC in 2014 to help improve the capitalization of the State Oil Company as well as forestall a situation where it becomes a regular practice by the Government of Ghana to be making such demands Further, the Ghana National Gas Company must ensure that all outstanding receivables in respect of lean gas sold to VRA is paid as a matter of urgency so as to guard against the GNGC falling into the never-ending cycle of indebtedness prevalent in the power sector.


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