The Public Interest and Accountability Committee (PIAC) has said it is dismayed at the manner in which petroleum revenues are being utilised, warning that aspirations of transforming the economy using oil will not materialise, if nothing is done immediately.
Among the infractions of the Petroleum Revenue Management Act (PRMA) include an amount of GH¢1.5 billion of Annual Budget Funding Amount (ABFA) – the portion of petroleum revenues earmarked for government spending in a particular year – which was unutilized and unaccounted for between 2017 and 2019.
The Committee also wants an amendment of the PRMA to, among other things, limit ministerial discretion in allocating excess revenue over the Ghana Stabilisation Fund (GSF) cap between the Contingency and Sinking Funds.
This follows the withdrawal of US$189.13million in 2019 as excess over the cap (ceiling) of US$300million placed [at the discretion of the Minister of Finance] on the GSF. The excess was withdrawn into the Sinking Fund, which is set aside for debt repayment or as collateral. This, the Committee noted, defeats prudent management of oil funds.
Again, it cited wrongful lodgement of petroleum funds into the accounts of the Ghana Revenue Authority, contrary to PRMA provisions. “We are already on the trap to ‘resource curse’ and until we reserve this trend, I don’t know how the next generation can point to something in this country as to how oil has benefited us. We are on course to misuse the oil revenue if we continue on this path,” PIAC’s Chairman, Noble Wadzah, lamented.
“Amendment is necessary to remove the ministerial discretion in allocating excess revenue over the GSF cap between Contingency and Sinking Funds, mandating that a prescribed portion of the excess over the cap goes into the Contingency Fund,” Mr. Wadzah, who spoke at a roundtable discussion with the media at Aburi in the Eastern Region said, adding that this is “to ensure that there is enough funds in the Contingency Fund to address national emergencies, like COVID-19.”
Meanwhile, its 2019 annual report revealed other violations in the use of the ABFA, as 45.14percent of it was spent on recurrent expenditure, with 54.85percent on capital expenditure, contrary to Section 8(4)(a) of Act 893 which requires that a minimum of 70 percent be spent on public investment expenditure.
Additionally, for the second consecutive year, there was no allocation from the ABFA to the Ghana Infrastructure Investment Fund (GIIF), converse to the provisions of the PRMA and GIIF Act 877. This, PIAC, added, could put future infrastructure development in jeopardy if not checked.
The GIIF seeks to set aside a portion of petroleum revenue for the country’s infrastructure needs, like the Terminal 3 at Kotoka International Airport which benefited from a US$30 million GIIF investment.
Holding duty bearers accountable
The Committee, which has oversight responsibility in the management and use of the country’s petroleum revenues but lacks the power to hold individuals and organisations to account on their use of the funds, is urging Parliament to bring its oversight mandate to bear on the Ministry of Finance’s impunity and failure in not accounting for unutilized ABFA.
It also wants the office of the Attorney General to pursue individuals and organisations that breach or misappropriate petroleum funds.
Although PIAC lacks prosecutorial powers, per section 58 of the PRMA, the institutions of state that do, include the Attorney General’s office, the Economic and Organized Crime Office, and the Office of the Special Prosecutor. However, all have failed to initiate action towards sanctioning offenders, according to PIAC.
Sanctions prescribed by law range from fines of between 250,000- and 500,000 penalty units and jail terms of between 7 – 15 years, or both. To date, the Committee said there is no record of prosecution despite the teething issues and infractions it has continuously brought to public knowledge through its investigations and reports.
This lack of punishment, the Chairman noted, is encouraging disobedience of the law: “When institutions or individuals go contrary to the law and there is no response from the duty bearer to act on that person, then it becomes an incentive for others to commit similar crimes.”
Ideally, Mr. Wadzah said the PRMA was crafted with the intent that there will be a long-term national development plan however, 10 years into commercial production that has not been achieved. “We cannot continue to consign ourselves to a second tier thinking of the law and make it as if that is the default position. The default position is to have a long-term national development plan.
The law is trying to achieve a purpose and the purpose is to make sure that petroleum becomes a blessing, on the basis of how we have misused our mining revenues in the past, that is how the PRMA came about,” he said.