Ghana earns $903m from oil

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Ghana has to date, lifted about 5.9 million barrels of crude oil, accumulating revenue of US$903 million, the National Co-ordinator of the Ghana Extractive Industries Transparency Initiative (GHEITI), Mr Franklin Ashiadey, has said. According to a Ghana News Agency (GNA) report, Mr Ashiadey made this known at a one-day sensitisation workshop on GHEITI on oil and gas for assembly members of the Nzema East Municipal, Sekondi- Takoradi Metropolitan, Jomoro, Shama, Ellembele and Ahanta West at Axim in the Western Region. The GHEITI Secretariat at the Ministry of Finance and Economic Planning organised the workshop. But the Parliamentary Select Committee on Mines and Energy, the Public Interest and Accountability Committee (PIAC) on Oil and Gas and the Africa Centre for Energy Policy-Ghana, a civil society organisation in the oil sector, have raised a red flag over the lack of transparency in the activities of the Ghana National Petroleum Company (GNPC) in the management of the nation’s oil revenue. The organisations argued that although the GNPC had received over half of Ghana’s entire oil revenue for last year, it had failed to account for a single Ghana cedi and cautioned that steps must be taken to prevent the GNPC from becoming a monster and a law onto itself. Members of the three entities made the call in separate interviews with the Daily Graphic on the sidelines of a two-day capacity building workshop for members of the PIAC, the Parliamentary Select Committee on Mines and Energy and the Commission on Human Rights and Administrative Justice (CHRAJ) at Aburi last Friday. Dubbed “Making Ghana’s Oil and Gas Resource Count”, the workshop was organised by the Institute of Economic Affairs (lEA), STAR¬-Ghana and the Centre for International Private Enterprise. The first annual report of the PIAC uncovered several issues and discrepancies in the country’s oil sector reporting, such as the wide gap between government revenue projections for 2011 and the actual revenues received. The report also noted that the GNPC was yet to provide the PIAC with a report on the use of funds (GH¢315,390,698) received to cover its activities in 2011. The GNPC did not pay dividend to the government for 2011 because the company needed to plough back its profits to recover significant investments and operating costs associated with its participating interest. According to the GNA report, Mr Ashiadey explained that the shortfall between the projected revenue and the actual receipts was mainly due to failure to consider that most tax revenue remained unavailable, while the sector was still coming on stream. He said the committee’s report urged the government to follow the letter of the law when forecasting revenues because the projections determined what the country should save, as well as spend. He said the committee was expected to ensure that the Ghanaian public had the opportunity to debate how the government was managing petroleum revenues in the light of the country’s development priorities. He said the success of Ghana’s oil would not be measured by the number of barrels of oil produced but the amount of poverty reduced with the revenue from the barrels of oil produced. Mr Ashiadey said it was incumbent on Ghana EITI stakeholders to ensure that the requisite systems were in place to promote good and accountable governance in the management of the country’s oil resources. To that end, he said, strong policy institutions, legal frameworks, prudent revenue management, transparency, among others, were required. He said it was in that regard that the government was committed to the EITI implementation in the oil and gas sector to ensure transparency in oil revenue management. Expressing concern over the lack of transparency in the management of the nation’s oil revenue in an interview on the sidelines of the workshop at Aburi, Mr Amin Adam of the Africa Centre for Energy Policy-Ghana said the GNPC must be supported financially, technically and in capacity to build its capacity and in the future become a competitive operator in the industry, so that Ghana would eventually benefit, writes Donald Ato Dapatem. “However, what we should prevent is allowing the GNPC to become a monster devouring the nation,” he said. Mr Adam explained that the Petroleum Law defined how resources should be allocated to the GNPC. He said surprisingly, it came out from the PIAC report that the GNPC had ploughed back its dividend, a move it had no mandate to make, and explained that the definition of benchmark revenue included expected revenue from oil and gas and dividend from the national oil company. “So if the GNPC decides to plough back, then it means that the benchmark for 2011 is incomplete, which is inconsistent with the law. We should prevent the situation where the GNPC will arrogate to itself the power to decide what to hold back out of the oil revenue because the law has defined how money should be allocated to them,” he said. According to Mr Ishmael Edjekumhene, a member of the PIAC, the committee first raised the issue about the accountability and transparent posture of the GNPC when it released its report this year. He explained that it was unacceptable that a company which was receiving close to 50 per cent of the nation’s entire revenue from oil and gas had not completed its audited accounts for last year for the ordinary Ghana to know how much it had received on his or her behalf and how much had been spent on what. “But the mere fact that the GNPC received a chunk of the nation’s receipts from the oil and gas imposes a little bit of responsibility on it to be extra-transparent and accountable to the people of Ghana,” he added. Mr Edjekumhene said one of the worrying developments was the indication by the board chairman of the GNPC that the company would sponsor the Black Stars to the tune of $3 million yearly. “Why should the GNPC spend $3 million on the Black Stars when the team has done so exceptionally well over the year that it has become a big brand name which will be sponsored by any commercial entity?” he queried. The Acting Chairman of the Parliamentary Select Committee on Mines, and Energy, Mr Ernest Kofi Yaka, said parliament, as the representative of the people of Ghana, was in the dark regarding the revenue that the GNPC had received on behalf of the people. He quickly gave the hint that the House would have to very quickly summon the management of the GNPC to account for its activities and, most importantly, the huge sums of money it had received from the oil-producing companies since Ghana found oil in commercial quantities. “As a member of the committee, I don’t know what is happening in the GNPC,” he said. He expressed worry when it came to light that the GNPC had been given thousands of dollars for the training of Ghanaians in the oil and gas sector yearly. According to a, report presented at the workshop, the GNPC had been receiving between , $75,000 and $250,000 annually from the oil companies as petroleum costs, which were deductible from the petroleum income tax. “As Members of Parliament, we must know the criteria for the selection of those who have been benefiting from such training, how much is spent on each person, how much they have received for the training, among other issues,” he noted.

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