Ghana’s Public Interest and Accountability Committee (PIAC) is criticizing the Ministry of Finance for failing to deposit oil revenue from Jubilee Oil Holding Limited (JOHL) into the Petroleum Holding Fund (PHF) as required by law. This is the second time this has happened.
PIAC’s Concerns:
- Unpaid Funds: The Ministry of Finance withheld over $70 million in JOHL proceeds, bringing the total amount owed to the PHF to over $343 million at the end of 2023.
- Potential Violation: PIAC believes this is a violation of the Petroleum Revenue Management Act (PRMA). The Act mandates that all oil revenue goes into the PHF.
- JOHL Classification: PIAC argues that JOHL, a subsidiary of Ghana National Petroleum Corporation (GNPC), qualifies as an oil revenue source under the PRMA.
Additional Issues Highlighted by PIAC:
- Declining Oil Production: Ghana’s crude oil production has fallen for four straight years, dropping from 71.44 million barrels in 2019 to 48.25 million barrels in 2023.
- High Service Rentals: International oil companies continue to charge high service rentals, exceeding $2 million at the end of 2023.
- Underfunded Stabilization Fund: The Ghana Stabilization Fund (GSF) cap was set at $100 million for 2023, far below the formula-determined amount of $581 million. This hinders the fund’s ability to serve its purpose.
- Uneven Development Costs: Development and production costs are significantly higher in the TEN field compared to Sankofa Gye Nyame field, despite similar production levels.
PIAC Recommendations:
- The government and regulators should take steps to reverse the decline in oil production and invest in unexploited fields.
- The Ministry of Finance should consistently pay all oil revenue into the PHF as mandated by law.
- The Ghana Revenue Authority (GRA) should intensify efforts to collect outstanding surface rentals with penalties.
- The Ministry of Finance should ensure the District Assembly Common Fund (DACF) receives the minimum required 5% allocation of the Annual Budget Funding Amount (ABFA).
PIAC’s report sheds light on potential mismanagement of oil revenue in Ghana. The Committee’s recommendations aim to ensure transparency and responsible use of these resources.
