The unfair regional distribution of oil cash must end

The unfair regional distribution of oil cash must end

The Petroleum Revenue Management Act [PRMA] 893 [Previously 815], explicitly provides for an even distribution of the oil revenues among the 10 regions of Ghana. Section 21 (2c) says, “the use of the annual allocation of the Annual Budget Funding Amount shall be [used] (a) to maximize the rate of economic development; (b) to promote equality of economic opportunity with a view to ensure the well-being of citizens; and (c) to undertake even and balanced development of the regions; (c) guided by a medium term expenditure framework aligned with a long term national development plan approved by parliament…”.

My emphasis is on “to undertake [even] and [balanced] development of the regions”. This suggests that, if the finance minister is choosing a project under the priority areas to spend the Annual Budget Funding Amount, he should be minded of section 21(2c) of the law that, if he is going to finance educational projects in the western region or any other region, other regions must get similar value of the ABFA [even if not for education in the other regions] such that other regions will have same money to develop priority areas.

The subsection (C) discourages the spending of a huge chunk , or all the oil money in one or two regions to the detriment of the others. Now, the Public Interest and Accountability Committee, PIAC, has been publishing how much each of the 10 regions in the country receives from the distribution of the revenue. This is why what PIAC says in its report is critical.

PIAC looks at the individual projects going on in each of the 10 regions funded by the oil for each year since 2011. But how can the accuracy of this regional distribution be accepted when over four projects said to be in the Western region are not in fact in the region but in other regions? To add to that, the monies said to be spent on those project runs into many millions of cedis, suggesting that the western region is receiving a large portion of the oil cash. That is unfair and it does not satisfy the spirit of subsection (C) above.

Proper scrutiny is required. It is for this same reason the Finance Ministry must provide credible and sufficient information on the projects. That said; to the main issue now.

oil-distribution

Between 2011 and 2013, the Western Region received the largest share of spending allocations from ABFA (27%) over the 3 year period. [Including projects in other regions, but said to be in the western region].

It is followed by Ashanti region with 15%, Eastern and Greater Accra both had 14% and the Volta Region (10%). Is that even and balanced development of the regions? How even and balanced is this? Volta10%, Brong-Ahafo 7%, Central 4%, Northern 4%, Upper East Region 4%, Upper West Region 1%. Even and balanced distribution indeed! Regional distribution of oil revenues-2014 Oil revenues in the form of ABFA were also disbursed among the regions in 2014.

In this year’s disbursement, there was a category introduced called “others”. PIAC explains why… “…some of the projects cut across regional boundaries and benefit more than one region because of thenature of the project. For example the Ghana Gas project [at Atuabo in the Western Region] is a national project which will benefit the entire nation even though it is located in the Western Region.

The Accra – Kumasi highway is another example of cross regional investment which will benefit regions in the northern sector of the country”. So projects of this nature funded by the ABFA fall under the “other” category.

Beyond these projects, there were other monies that were shared among the regions.

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From the image, why is it that all other regions are not getting 21% as the Western Region? Why was only 2% allocated to the Northern Region? Is this the interpretation of Section 21 (2c) of the act? Why is there no explanation from the Finance Ministry on why it is abusing the provisions in the act?

Regional distribution of oil revenues-2015 [Semi Report by PIAC]

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The trend of the abuse of section 21 (2c) is still on. In the Semi 2015 Annual Report by PIAC, 0% allocation was made for the Upper East and West and the northern regions. Again, whilst only 1% allocation was made to the Brong Ahafo region, 36% was made to the Western Region. Isn’t this is an abuse of the PRMA?

I guess moving forward the Finance Ministry must respect the Petroleum Revenue Management Act 893, and abide by the law. We have done 6 years of the sharing of petroleum revenues. Six years is enough to spot the inefficiencies.

 

By: Obrempong Yaw Ampofo/ghanadecides.com/Ghana

 

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