After a decade of being operational, the Ghana Petroleum Revenue Management Act (PRMA) remains fraught with a host of weaknesses that undermine the proper implementation and management of petroleum revenues, namely: fiscal indiscipline, limited transparency, interalia.

Of course, the establishment of the PRMA has improved the management of petroleum revenue, but this is not a case of what would have been in the absence of the PRMA, by which view, actors and stakeholders would have to take comfort in the status quo. Rather, it is a case of how to make the current management of petroleum revenues more efficient and effective.

The Petroleum Revenue Management Act, 2011 (Act 815) and subsequently amended in 2015, PRMA Act 2015 (Act 893) was structured to ensure the efficient allocation and use of petroleum revenues. More broadly, this motive was hinged within the quest to avoid a resource curse, as have been the case with some oil rich neighbours in the sub-region such as Nigeria.

The Public Interest Accountability Committee (PIAC), a body formed by virtue of the PRMA has raised numerous issues of breach of the PRMA by the government, in its annual reports. For instance, in its 2017 Annual Report, it found that out of the GH¢736.03million ABFA budgeted for use on various earmarked projects and expenditures for the year, government spent GH¢332.29 million– leaving an unspent amount of GH¢403.74 million.

According to the PIAC, this raises concerns about the extent of budget compliance in terms of the ABFA allocation as well as the country’s absorptive capacity. Furthermore, out of the GH¢332.29 million spent, GH¢202.38million went into the Free SHS programme and scholarships – which are recurrent expenditure.

In effect, when added to expenditures in other priority areas, the government spent 63 per cent of the ABFA amount on recurrent items, while only 37 per cent went into capital investments, indicating a gross breach of the PRMA.

Other areas that require attention

Again, the PRMA, although ensures information on the priority spending of petroleum revenues such as publishing the list of projects being funded, it is still inadequate in the respects of total value of projects to which petroleum funds are allocated, expected date of commencement and completion, contractor details, stages of implementation, and where available balances are lodged by the Ministry of Finance.

There are also concerns the Act has not addressed issues pertaining to revenue volatility and expenditure smoothing or contributed to long-term fiscal sustainability.

In the event of volatility in world prices of crude oil, revenues into the various funds have also tended to take a nose dive. A typical example is the impact of the COVID-19 pandemic with its concomitant effects on the economy which saw petroleum revenues drop as well as allocations to the fund.

Per Section 23 of the PRMA, it allows for use of discretion by the Minister of Finance in terms of capping, withdrawal and transfers from the Ghana Stabilization fund. This indicates a loophole which needs to be addressed to avoid abuse of the fund.

While checks have been laid down to that end in respect of parliamentary oversight, this has done little to avoid the uncertainties in the determination of caps and the use of excess funds. Noting this, however, there is no proven system for the determination of the caps and use of proceeds.

Given these numerous weaknesses and threats to the PRMA, the government needs to do a lot more in terms of ensuring that the country’s petroleum revenues are utilized judiciously. Issues regarding fiscal indiscipline and non-transparency should be addressed to ensure full benefits of the PRMA.