The document discusses Ghana's management of oil revenues according to the Petroleum Revenue Management Act. It provides an overview of oil revenue trends, the objectives of allocating revenues, and spending priorities as outlined in the Act. These include investing in agriculture, education, health, and infrastructure to promote economic development and equality of opportunity. The document notes both challenges in implementing the Act, such as a lack of transparency around specific projects, and positive aspects, like a focus on education in the most recent budget.

1. Oil Revenue and the National Budget
Penplusbytes,
26th Sep, 2017
Benjamin Boakye (Executive
Director)
Africa Centre for Energy Policy

2. Focus
❖ PRMA and the
National Budget
❖ Governance of Oil
revenues
❖ Compliance with the
PRMA in the Budget
❖ After the Budget,
what next?

3. Oil Revenue Trend
❖
2011 2012 2013
2014 2015 2016

4. ❖ Many oil producing countries
mismanage oil revenues -Oil
curse
❖ Few people benefit and the
greater majority live in poverty
❖ the preoccupation of leadership
is not how to generate revenue
for the state but how to
consolidate their political
power by annexing the
ownership right of the
resources
❖ the sad part- the politicians steal
and save outside the country.
The Paradox of Plenty

5. Gen Yakubu Gowon (Head of State, Nigeria – 1966 -1975)
Leadership is Key in
Oil Governance
Ladies and Gentlemen,
our problem is no
longer money but how
to spend it’

6. Ghana’s Strategy against Oil Curse and Dutch Disease
making and
changing the laws
❖ The Petroleum Revenue
Management law (Act 815),2011
❖ Local content and Local Participation
Regulation (LI2204), 3013
❖ E&P Act passed in 2016

7. The Architecture of the Law

8. Sources of Oil Revenues
Actual
Petroleum
Revenues into
PHF
Royalties (oil
& gas) plus
AOE
Corporate
Income tax
Other Revenues –
Capital Gain Tax,
Surface rent, etc
GNPC’s Dividend
Net revenue inflow
from equity less
GNPC’s share

9. The Objectives of the PRMA
Section 21(2) defines spending objectives of oil
revenues:
The use of the annual allocation of the Annual Budget
Funding Amount shall be:
(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;
(c) to undertake even and balanced development of
the regions

10. Spending of Oil Revenue
• Section 18 (2) of Act 815
• The exact percentage of allocation of oil
revenues shall be ... guided by
– a medium-term development strategy aligned
with a long term national development
framework
– absorptive capacity of the economy and
– the need for prudent macro-economic
management.

11. Where to Spend
• Section 18 (3) of Act 815:
Where no long-term
national development plan
approved
– Agriculture and industry;
– physical infrastructure and
service delivery in education,
science and technology;
– potable water delivery and
sanitation;
– Infrastructure development
in telecommunication, road,
rail and port;
– physical infrastructure and
service delivery in health;
– housing delivery;
– environmental protection,
sustainable utilization and
protection of natural
resources;
– rural development;
– developing alternative
energy sources;
– the strengthening of
institutions of government
concerned with governance
and the maintenance of law
and order;
– public safety and security;
and
– provision of social welfare
and the protection of the
physically handicapped and
disadvantaged citizens.

12. Prioritisation of Sectors
• Section 18 (5) of Act 815
• Minister shall prioritize not
more than four areas when
submitting a programme of
activities for the use of the
petroleum revenue.
• Section 18 (6) of Act 815
• This will be reviewed every
three years except in the
case of national disaster

13. Revenue Management Structure
Ministry of
Finance
Investment Adv.
Committee
Bank of
Ghana
Advisory
services to
Minister
Operational
management
Fund
Managers
Parliament

14. Oversight Roles
Parliament
Auditor GeneralPIAC

15. Transparency Requirements
Accountable Institution Type of Report Frequency
The Minister of Finance Annual Report on the Ghana
Petroleum Holding Fund as part
of the annual Budget
Annual
Reconciliation Report on the
Ghana Petroleum Holding Fund
Annual
Report on advise from the
Investment Advisory Committee
7 days from
receipt of advise
PIAC Report on the management of
petroleum revenues
Semi-annual
Report on the management of
petroleum revenues
Annual
Bank of Ghana Report on the performance of
the Ghana Petroleum Funds
Semi-annual
Auditor General Audit Report on the Ghana
Petroleum Holding Fund
Annual

16. Investment in Pro-Poor Sectors
❖ Both citizens Consultation and research evidence Show
that investment in Agriculture, Education and Health
are the fastest route to achieving the objective of the
PRMA
❖ With high priority for Agriculture and Education

17. Agriculture
❖ 58% of Ghana’s landmass are for agriculture lands.
❖ half of the agriculture lands are under cultivation,
largely for rain fed agriculture
❖ out of 14million hectares of agricultural lands only
30,000 hectares are irrigated
❖ Ghana continues to import more food and meet

18. Year local Production/ Mt
Importation
of meat/ Mt
Variance/
Mt
2003
77,235 46,055
31180
2004
80,959 51,485
29474
2005
76,582 60,850
15732
2006
92,893 73,474
19419
2007
97,229 96,965
264
2008
101,895 114,472
-12577
source: MOFA

19. Education

20. ❖ Thin Spreading of revenue on so many projects
❖ Missing projects
❖ double counting of projects under the GoG funding source
❖ Time overruns
❖ Cost overruns
❖ Communities do not know the projects receiving oil
revenues
PRMA Implementation Challenges

21. ❖ we followed the project to
Dabaabi
❖ realised the project was not
there
❖ Followed up to the assembly
and did not get information on
the project
Dabaabi Kindergarten
GHS 251,000

22. 2017 Revenue Sharing in $s
Total Estimates US$515,674,244.44 Comments
GNPC 273,590,424.25
$228.3m for Equity
financing and $45.3m as
share of Net Capi
ABFA 169,458,674.13
Expenditure in the
Budget
GSF 50,837,602.24
not sure what the
Minister wants to do
with $100m cap
GHF 21,787,543.82 Safe from attack

23. Priority Areas for ABFA in Cedis
Priority Area Amount Percentage
Infrastruc
ture
Service
Agriculture 156,077,117 19.5
142,400,000
13,677,117
Physical Infrastructure
and service delivery in
Education
211,717,458 26.5
0
211,717,458
Physical Infrastructure
and service delivery
inHealth
50,000,000 6.3 50,000,000
0
Road, Rail and other
Critical infrastructure
376,620,676 47.3
365,020,676
11,600,000

24. Some Clarity in the priority Areas
❖ Only Five MDAs will receive Funds from ABFA
❖ There has been a consistent reduction in MDAs from 16
in 2012 to 7 in 2016
❖ Road, Railway and other critical infrastructure may
however pose interpretation challenges in the future

25. Goods and Service Component of ABFA
❖ the PRMA allows up to 30% of ABFA for recurrent
expenditure
❖ the Budget allocated exactly 30% to goods and services
❖ 88.6% of the Goods and services budget is allocated to
the Education sector for Free SHS - this further
improves the measurability/tracking of impact of the
ABFA expenditures.

26. Next Step
❖ once discussion on the budget has ended we have to
move on to tracking the expenditure
❖ we are still not sure of the specific projects that will
receive funding under the prioritised ministries
❖ citizens must be interested in Government project- talk
to your Assembly

27. Prevent this!