Ghana Petroleum Revene Management Lectures By Dr Thomas Kojo Stephens was done September 25.

1. GHANA PETROLUEM
REVENUE MANAGEMENT
Dr. Thomas Kojo Stephens
University of Ghana School of Law

2. PETROLEUM REVENUE MANAGEMENT ACT, 2011 (ACT 815)
AS AMENDED BY
PETROLEUM REVENUE MANAGEMENT (AMENDED) ACT, 2015
(ACT 893)

3. Primary Purpose
Section 1 - Application
“Regulate the
 collection
 allocation
 management
by government of petroleum revenue
derived from upstream and midstream
petroleum operations.”

4. Revenue from Industry
What is the first point of call for
revenue generated from the
industry?

5. Section 2: Petroleum Holding Fund
 Intermediary Fund
 Designated public fund at Bank of
Ghana to receive and disburse
petroleum revenue

6. Section 16 - Disbursement from the
Petroleum Holding Fund
Shall be made only:
 In support of the national budget
 Savings and Investments

7. Section 5 – Prohibited Use
 To provide credit
 Collateral for debts, guarantees,
commitments, or other liabilities
 No borrowing against petroleum
reserve

8. Disbursement of Funds
Where are the Funds Disbursed?

9. Disbursement
 Ghana National Petroleum
Corporation
 Annual Budget Funding Amount
(ABFA)
 Petroleum Funds (Ghana Heritage
Fund, Ghana Stabilization Fund)
 Exceptional Purposes such as tax

10. Ghana National Petroleum
Corporation (GNPC)
 National Oil Company
 Receives share from Petroleum
Holding Fund

11. Section 18 - Annual Budget Funding
Amount (ABFA)
 Disbursed to Consolidated Fund to
support the Annual Budget
 Must be used for development related
expenditures
 Law allows for ABFA to be used as
collateral but only up to 10 years after
enactment of Act 815

12. Annual Budget Funding Amount (ABFA)
 PRMA calls for allocations to be
aligned to a long term national
development plan
 Absent that, priority to 12 areas
specified in Act but not more than 4
areas at a time; can be reviewed
every three years
 Allocation part of national budget

13. Section 10 - Ghana Heritage Fund
 Provide endowment for future
generations when petroleum reserves
depleted
 Monies in the Fund cannot be touched
 Parliament can review restrictions on
Fund every 15 years; can also transfer
portions of accrued interest to another
Fund

14. Sec. 9 - Ghana Stabilization Fund
 Mitigate negative effects of oil revenue
volatility on national budget
 Sustain public expenditure capacity
during periods of unanticipated
petroleum revenue shortfalls

15. Ghana Stabilization Fund
 Minister for Finance has discretion to
place a cap on how much can be
accrued to Fund as necessitated by
macroeconomic conditions
 Can be reviews downwards when oil
prices fall, upwards when prices rise

16. Ghana Stabilization Fund
 Cap reviewed downwards from 250
million, to 150 million, to 100 million
 Once cap reached, excess transferred
into the Contingency Fund (Sinking
Fund) for debt repayment subject to
approval from Parliament

17. Section 41 - Encumbrances
 Cannot encumber Petroleum Funds
whether by guarantee, security,
mortgage
 Court cannot make an order for the
attachment of moneys in the
Petroleum Funds

18. Consolidation of Ghana Stabilization
Fund and Ghana Heritage Fund
Within one month after petroleum
reserves depleted:
 Moneys held in Ghana Stabilization
Fund and Ghana Heritage Fund shall
be consolidated into single fund –
Ghana Petroleum Wealth Fund

19. Ghana Petroleum Wealth Fund
 After its formation, Stabilization and
Heritage Fund shall cease to exist
 Heritage + Stabilization Fund = Ghana
Petroleum Wealth Fund

20. Summary of Disbursement
 GNPC
 Annual Budget Funding Amount
(ABFA)
 Ghana Stabilization Fund
 Ghana Heritage Fund

21. MECHANISM FOR DISTRIBUTION
OF PETROLEUM REVENUE

22. GNPC
 Not more than 55% of carried and
additional interest

23. Annual Budget Funding Amount (ABFA)
 Not more than 70% of remainder
 Minimum of 70% of this 70% should
be used for public development
expenditure
 Out of the 70% for public expenditure,
25% is to be allocated to Ghana
Infrastructure Investment Fund (GIIF)

24. Stabilization Fund and Heritage Fund
Distribution
 Stabilization Fund: Not more than
70% of remaining 30%
 Heritage Fund: Not less than 30% of
remaining 30%

25. Transfers for Exceptional
Purposes
 Refund tax overpayment
 Pay royalties to local communities with
regard to onshore operations
 Provide appropriate compensation to
local communities

26. ORGANIZATIONAL

27. Section 26 - Bank of Ghana
 Responsible for day-to-day
operational management of
-Petroleum Holding Fund
-Petroleum Funds
Subsequently,
-Petroleum Wealth Fund

28. Section 29 - Investment Advisory
Committee
 Formed January 2012
 Formulate and propose investment
policy
 Advise Minister on broad investment
guidelines
 General performance monitoring

29. Section 31 – Appointment of
Members
 Seven (7) members, at least one
woman
 Persons of proven competence in
finance, investment, economics etc.
 Cannot be appointed for more than
two consecutive terms

30. Section 31 – Appointment
 Minister of Finance in consultation
with Governor of Bank of Ghana
nominates members
 President appoints
 President appoints Chairperson

31. Section 51- Public Interest and
Accountability Committee
Section 52 – Objects
 Monitor and evaluate compliance with
Act
 Provide space and platform to debate
whether spending prospects and
management and use of revenue
conform to development priorities
 Provide independent assessments on
management, use of petroleum revenues

32. Public Interest and Accountability
Committee
 Members of Accountability Committee
are appointed by the Minister (Sec.
54)
 Shall elect their own Chairperson

33. Ghana Revenue Authority
 Assesses, collects and accounts for all
petroleum revenue due to the State

34. Issues
 Not getting best return on investments
especially as juxtaposed against
borrowing
 Petroleum revenue spread thin – PIAC
recommendation of legacy projects
 Difficulty in identifying projects done
with petroleum funds because of co-
mingling; lack of engagement with

35. Issues
 Sliding scale used in respect of
Stabilization Fund
 Project Verification
 Surface Rentals; GRA lack of
enforcement powers

36. THANK YOU!!!