Kodzo Yaotse, Policy Lead, Petroleum and Conventional Energy at the Africa Centre for Energy Policy (ACEP) has described Ghana’s petroleum sector as having performed fairly well over the past decad. He, however, indicated there is the need to improve on the efficiency of spending of its oil revenues.
In cumulative terms, Ghana’s petroleum revenues accrued over the past decade is US$6.55 billion, according to the Public Interest and Accountability Committee (PIAC). This translates into a US$3.3 billion between the period (2011-2015) and US$3.25 billion between the period (2016-2020).
Meanwhile, it is almost a cliché considering the idea that the country’s mineral resources including its decade-long oil find, have not yielded maximum benefits; for the reason that the real value of resource wealth, has not brought prosperity to wider populations of the economy.
Efficiency in Revenue Spending
Speaking to the Vaultz News, the extractives and energy policy specialist commented: “We’ve done fairly well, but there are areas that we have to improve… the issue of efficiency of spending.”
Sharing in the sentiments of the ordinary Ghanaian, he quizzed:
“…We cry that we are not getting enough. How well do we expend those revenues that we get from the resources? Again, how well does GNPC spend these revenues? What goes into the Annual Budget Funding Amount (ABFA); is there value for money for those expenditures?”
Kodozo Yaotse, Policy Lead, ACEP
He further asserted that, “making money available goes beyond just collecting”. It is an important endeavor to manage revenues accrued from the country’s oil resource, he added.
“When it comes to efficiency of spending, not a lot of attention has been there. So, there are some governance strategies around those areas that we need to strengthen. However, if you even it out when it comes to regulation, policy and overall governance, we are doing fairly well. ”
Kodzo Yaotse, Policy Lead, ACEP
Accordingly, the resource governance index (RGI) which covers all the facets of the sector currently shows improvement in the petroleum sector, scoring 78/100 in the RGI 2021.
Given the context of the ongoing energy transition, Ghana faces a trilemma of issues: transition towards energy security, moving towards a low carbon emissions pathway and charting a growth and transformation plan that will have to lift millions out of poverty.
Suitable fiscal regime in the period of energy transition
On this basis, there are three divergent perspectives shared among experts, especially considering the ongoing energy transition. While the debate has been strongest on a regime-change towards production sharing agreement (PSA) and a call for no-change to existing fiscal regime, others favour relaxing the fiscal regime through taxes and royalties and PSA contracts reduction.
- Relaxing Petroleum Fiscal Regime, not Guarantee for Investments into Sector
- Ghana: Reform petroleum fiscal regime to reflect changing dynamics in oil and gas sector
The Energy Policy Specialist averred that: “Every country needs to assess what the transition means for them because eventually, the transition is imperative; it is happening.” Specifically, he indicated that the country should consider its own objectives for the transition, and what strategies to implement to achieve the objectives. Currently, Ghana’s fiscal profile accumulates 53 per cent of profits on average, and this is quite appreciable, he said.
He further indicated that the push for “production sharing contracts does not arise at this time”. Because, the cost involved in petroleum development is huge, and for the government to optimize revenue in that space— PSA, there is need to investigate the cost in order to ascertain the amount left that is to be shared in oil operation activities.
For the country to attract investment into its hydrocarbon sector, despite the ongoing capital discipline by investors, he indicated that the government can employ a mixture of the strategies to its fiscal regime, considering its objectives towards the energy transition.
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