Public Interest Accountability Committee
PIAC WANTS FIN. MINISTRY TO ACCOUNT FOR USE OF OIL FUNDS
News Date : 30th November 2020

The Public Interest and Accountability Committee (PIAC) has urged Parliament to force the Ministry of Finance to account for the use of the country’s petroleum revenues.

This follows the ministry’s refusal to provide half-year data on Annual Budget Funding Amount (ABFA) – the amount of petroleum funds that goes to support government’s yearly budget. This is the fourth time the ministry has done so, PIAC said, contrary to the country’s petroleum laws.

PIAC is mandated by law – the Petroleum Revenue Management Act (PRMA) – to exercise a watchdog role over management and utilisation of the country’s oil funds, but lacks the power to hold persons and institutions accountable for their use/misuse of the funds.

It therefore wants Parliament to strengthen its oversight mandate on the ministry, because it believes the ministry’s persistent failure to provide data on ABFA utilisation is not only adversely affecting the Committee’s, but also eroding gains in the fight for transparency and accountability in management and use of Ghana’s petroleum revenues for the benefit of citizens.

“For the fourth time, the Ministry of Finance has failed to provide data on ABFA utilisation for PIAC’s analysis and reporting. This practice makes it difficult to reconcile disbursements and expenditure, and ultimately undermines the spirit of accountability as envisaged in the PRMA,” PIAC said in a statement announcing findings of its semi-annual report on the management and use of petroleum revenues for the first half of 2020.

Consequently, it added that the report is without the Annual Budget Funding Amount expenditure information for the period – arising from the Ministry of Finance’s failure to provide the expenditure data requested by PIAC.

As a result, it said, it was also unable to report on the programmes and activities undertaken with an amount of US$169.51million disbursed to the ABFA for the period. Similarly, the Committee said it was unable to provide update on the status of the unutilised and unaccounted for ABFA balance – which stood at GH¢1.5billion, as reported in the 2019 PIAC Annual Report.

Report findings

It noted that cumulative raw gas production increased significantly by 65 percent, the highest recorded half-year volume of gas produced since 2010; while total petroleum receipts in the Petroleum Holding Fund (PHF) for the period stood at US$323million, indicating a decline of 11.32 percent.

With regard to the Ghana Petroleum Fund reserves, the report revealed that a 24.09 percent reduction was recorded at end of the period compared with the same period for 2019. This was as a result of the lowered cap and subsequent withdrawals from the Ghana Stabilisation Fund (GSF). Consequently, the GSF yield reduced by 68.08 percent from that of the same period in 2019.

It also found that the Ghana National Gas Company (GNGC) received US$1.78million under the Cash Waterfall Mechanism in order to address its indebtedness to the Ghana National Petroleum Corporation (GNPC) for gas supplied.

However, it noted that there was no payment to GNPC. The non-payment of gas revenue, the report lamented, denies the Petroleum Holding Fund of its due entitlement. Meanwhile, for the period, cumulative indebtedness to GNGC continued to increase – to US$942 million, as a result of the failure of GNGC’s customers to honour their obligations.

It also established that GNPC spent only nine percent of its total receipts on Jubilee equity financing, due to the re-phasing of work programmes as well as disputes surrounding the cash calls submitted by the operator. The disputes, the report added, are being negotiated between GNPC and the contractor party.

“GNGC and GNPC should agree on a payment plan over the receipts from the Cash Waterfall Mechanism. This would ensure that GNPC receives payment for raw gas supplied, and makes appropriate lodgements into the PHF. Parliament should play a critical role in this arrangement.

“Although negotiations are ongoing between GNPC and the contractor party, PIAC recommends that a contingency amount should be set aside by the Corporation in anticipation of the dispute’s eventual outcome, as it could go either way,” advocated PIAC’s Chairman, Noble Wadzah.

Source : Business and Financial Times