Where did Ghana’s oil money go

Where did Ghana’s oil money go

Now the money has come. 70 percent of revenue the oil and gas sector now supports the budget. Brilliant! The 30 percent goes into heritage and the stabilization funds. Yea! That’s what the 2007 pomp and pageantry brought us.

Several hundreds of concocted projects were listed along some real expensive ones as projects undertaken with oil revenue. Shockingly, the state has not shown or named one flagship project made possible as a result of the coming on stream of the oil and gas exploitation.In my quest to understand where the oil money went after the 2007 pomp and pageantry, I discovered the absence of major projects were as a result of governance and management failures.

Incomplete governance framework

Ghana, with all the resources was declared a Highly Indebted Poor Country, HIPC in the early 2000s. Not that the resources had been exhausted then, but it had been mismanaged through a bad governance framework. Coming from that point, it was expected that the government would and implement the valuable lessons in the oil sector. Surprisingly, as it has always been a characteristic of Ghana, we were quick to pass laws on how oil moneys were going to be used instead of safeguarding what determines how much money we get. And so in March 2011, the Petroleum Revenue Management Act was passed quickly. It took close to 10 years before the Exploration and Production Bill was passed in 2016 after oil was discovered in 2007. Apart from that move, there is still the absence of full complement of laws to govern the sector. Currently, outstanding instruments include for the sector include Regulations to PRMA, Regulations to the new E&P law, Metering Regulations, Strategic Environmental Impact Assessment of our new Voltarian basin.

Lack of integration of the sector into the rest of the economy

Agriculture has held this country together. In fact, when the prices of primary export commodities was low on the world market, the government fell on Ghana’s agriculture sector. The challenge with this sector has been the export of all the raw materials. Ghanaian officials and experts knew this! But, since the coming on stream of the oil sector, Ghana’s agriculture sector has recorded negative growth in prime years. Agriculture has taken a downward decline. In fact, some monies meant for irrigation projects in the north of the country to boost agriculture vanished from the consolidated fund. That notwithstanding, Ghana is exporting the jubilee crude without adding value to it.
Oil and Gas contribution to our Gross Domestic Product at the best of times hover around 10 percent and in the worst of times at 3 percent. We have a stabilization fund to shore up the GDP for when crude oil prices falls on the world market.  But Gold and Cocoa which have also been subjected to similar price volatility never had some monies from their sale kept aside to provide similar support. It is time to create such a fund for the two natural resources.

Waste in spending oil revenue

I have never trusted managers of our oil revenues. I doubt their honesty, and my doubts are based on past happenings in the management of public funds. The oil revenue has been mismanged. The Public Interest and Accountability Committee PIAC recently uncovered that that several thousands of Ghana cedis have been sent to non-existing projects in the north of the country. These projects were simply non-existing. Besides, due to poor monitoring, some projects funded with oil money are already deteriorating. A case in point is the Otuam- Esuoehyia Road in the Central Region and Apam-Mumford-Otuam road.
There is more. Weak value-for-money consideration in the selection of projects has succeeded in making it difficult for the state to realize the transformative potential of the resource. Six years down the line, no significant project has been hailed. This is because the oil revenues have been spread thinly on projects, making it difficult to feel their impact.

Disjointed Regulatory front

Globally, Oil and Gas regulatory frameworks are heading towards a convergence. In Ghana, however, regulation of offshore activities is dispersed around industry. There is health and safety, environment and fisheries. So we have industry standards, health and safety been regulated by the Petroleum Commission, while environmental regulation and fisheries are regulated by the Environmental Protection Agency and Fisheries Commission respectively.
The industry regulator, whose activities have direct effect on fisheries, has nobody from the Fisheries Commission on its board of directors. Meanwhile the Act establishing the Petroleum Commission provided for a representative from the EPA on its board.

To add to that, there are no guidelines for the conduct of fisheries Impact Assessment to guide International Oil Companies. This puts the country in a situation where it has to accept findings of Environmental and Social Impact Assessments without means of verification. EPA and Fisheries Commission, and for that matter Ghana, lacks a research vessel for gathering baseline data on Ghana’s offshore environment. I guess when these strategic institutions are given a common front in the oil and gas space, they could be more proactive.
Going forward, these governance considerations, in my view, when implemented will get our oil sector to where the hearts and souls of patriotic sons and daughters of wish for it.

 

By: Obrempong Yaw Ampofo/ghanadecides.com/Ghana

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