The Institute of Fiscal Studies (IFS) has called for the use of Ghana’s heritage fund for development projects other than its intended purpose of providing for posterity.
The institute believes that posterity will come to benefit from long-term development projects, should the funds be invested in developing the country.
According to Head of Programs Nicholas Ekow De-Heer, building schools, hospitals and other infrastructure will serve posterity.
“The question has been asked, ‘why keep a fund for future generations when the current generation is in serious need’,” Head of Programs at the Institute, De-Heer queried.
Speaking at JoyFM’s Oil and Gas Forum on Monday, he called for a medium term expenditure framework which is aligned to a long term national plan for funds generated from the petroleum.
He said that this will be in line with what Ghana’s Petroleum Revenue Management Act (PRMA) says.
“Petroleum revenue is lodged with a specialised account; the Petroleum Holding fund with the Bank of Ghana. The PRMA provides a revenue schedule module that distributes the revenue between GNPC, the budget and the remainder goes to the Ghana Petroleum Funds.”
He stated that between 2011 and 2018 about 31% of revenue was allocated to the GNPC. Another 31% went to the Ghana Petroleum fund.
Agric receives 11% while 21.9% is allocated to education and capacity building, which is about a 5th of the total revenue acquired.
Close to 20% is also spent on expenditure and amortisation of loans for oil and gas infrastructure with a specific percentage of 19.3% recorded.
“You’ll notice that we have spread the funds thinly,” he stated.
And he says that potential impact is not seen in the country because of that.
“It’s like an individual who earns a salary and buys all kinds of things so in the end, the money is all gone but you don’t see what you’ve spent on,” he explained.
The Ghana Heritage Fund was established by the PRMA in 2011, to save oil revenues for future generations.
Mr. De-Heer stated that although significant income is generated from the petroleum funds, the country should take a look at how the funds are used.
Ghana in July 2007, discovered oil in the Western Region. Tullow Oil and Kosmos Energy discovered the oil in commercial quantities. They named the area “Jubilee Field”. The development of the production site started right away and in December 2010 production started.
The Programs Manager at the IFS stated that it had become necessary after the discovery, to study and make efficient policies to serve the interest of the country.
“Beneath the excitement, there was caution because we knew the sad story of Nigeria; Africa’s largest producer of gas,” he added.
According to him, Nigeria after discovering oil became a melting point of conflict, environmental pollution and corruption instead of the country reaping the full benefits of the product.
“So with cautious optimism, we took off, we went to Norway to sit under their feet and to learn from their success story.”
He revealed that a governing framework was established that led to the enactment of the Petroleum Management Act in April, 2011.
And measures geared towards promoting accountability as well as allocations of the funds, were established.
Authority was vested in Parliament which is seized with the mandate to determine allocations from the petroleum holding fund.
The Act also insisted on strict reporting guidelines on the Finance Minister and the Bank of Ghana was mandated to report on petroleum receipts, the volumes of oil being lifted and the likes.
Ghana’s production has significantly increased from an annual generation of 66,000 barrels of oil per day, to a little over 170,000 generation between 2011 and 2018.
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