The Public Interest Accountability Committee (PIAC) report on some oil-funded projects in three regions is inaccurate and misleading. In its own 2016 report, the PIAC reported that there was a sharp decline in petroleum revenue in 2016. The Public Interest Accountability Committee (PIAC) in its 2016 report revealed that “In 2015, the revenue from petroleum amounted to $396.17m but declined to $247.18m in 2016 representing 44% year-on-year decline. The 2016 decline is also 29% lower than government’s budgeted revenue of $348.42m”
In the 2016 budget statement, the petroleum sector was projected to bring in $502.10milion based on the projected benchmark crude oil output of $38.73 and benchmark price of $53.05 per barrel. However, the benchmark revenue for the second half of 2016 was revised downwards from $502.10 million to 348.42m in 2016 mid-year budget review when the international benchmark price was further reviewed downward to 45.35 per barrel.
Although an amount of $348.42m was expected from the upstream petroleum sector, the actual receipt fell short of the projected amount. All these were captured in PIAC’S own report. Government’s supplementary budget presented to parliament in 2016, revealed that out of an estimated $484.79million in petroleum revenue for the first half of the year, government bagged only $87.79 million, the lowest Ghana has ever realised since oil production started in 2010. It was projected that due to the faulty turret bearing component of the FPSO which occasioned a reduction in volumes from 100,000 barrels to as low as 33,000 barrels of crude a day, Ghana’s total production of oil could be in the neighbourhood of 63,000 barrels a day. We also heard from Tullow Oil Ghana that it will cost it will cost the five partners as much as $150 million to repair the damaged component of the FPSO.
Government had to continously revive the national budget on account of oil revenue shortfalls. Licenced upstream companies paid $465,920 in 2015 compared to about $907,501 in 2014, representing 49 percent drop, according to the Ghana Revenue Authority and Bank of Ghana 2016 report.
Oil revenue has become one of Ghana’s mainstays of the national economy and is likely to remain so for a long time to come, as it currently provides the bulk of government revenue and most of the foreign exchange earnings. For a mono- product economy like ours, it is not unprecedented, therefore, that a sudden and sustained decline in the price of the product will impact the country’s revenue negatively.
What PIAC should know is that – Ghana relies heavily on crude oil revenue to fund government spending on projects. Thus, drop in revenue in 2016 adversely affected government revenue and increased the requirement for borrowing and debt servicing thereby impacting the funds available for capital expenditure.
There are 500 projects across the country, the PIAC visited only 46 project sites in all out of which 3 could not be located in the Northern Region.
The PIAC in its report revealed that it is was alarmed at the absence of an absence of an investment advisory committee in the management of Ghana’s oil revenue for 2017. According to the PIAC, the situation meant that the Finance Minister, Ken Ofori-Atta had breached Section 29 of the Petroleum Revenue Management Act. After this putting its report out, it disappeared.