The Public Interest and Accountability Committee (PIAC), has proposed a national dialogue on the use of the Annual Budget Funding Amount (ABFA), to ensure sustainability.
This dialogue, it suggests, should preferably take place before the next budget and its outcomes inform the ABFA allocation in the 2016 budget.
The Chairman of PIAC, Prof. Paul Kingsley Buah- Bassuah made this suggestion in a presentation on “Following the Oil money: The use of petroleum revenue (2011-2014-2015) in community development” at a day’s forum organised by the Friends of Nation (FON) recently. It was attended by fishermen, the marine police, the media, researchers, Fisheries Commission, NGOs and law advocates.
He explained that there was an urgent need for the ABFA to be better targeted and well focused to help maximise its effectiveness and impact on the socio-economic development of Ghana.
“PIAC is therefore calling for a national dialogue or debate on how best the nation could derive the most benefits from its hydrocarbons.” he added.
Commenting on the thinly spread of ABFA spending, he recommended that, in order to forestall the arbitrariness as well as the accountability and responsiveness on the management of the Petroleum revenues, Parliament should make it mandatory that the Reconciliation Report should be submitted by the Minister of Finance during the first quarter of every year.
This, Prof Buah-Bassuah mentioned should include a report detailing the outcome and impact of ABFA spending in the preceding year.
The list of the projects, he said, should be supported by the ABFA in the current year and the justification for the projects which could pay off itself for sustainability.
The PIAC Chairman said, the Ministry of Finance, Bank of Ghana and PIAC must work together to establish some guidelines for interest to be earned on any unutilised funds, be it on the balances of ABFA or those set aside for specific purposes like the Contingency Fund, Debt Servicing and the Ghana Infrastructure Fund.
This, he believed, would forestall the recurrence of the situation experienced in 2014 whereby $222.93 million (GH666.06) remained in the Consolidated Fund without earning any interests, stressing that the mount which was swept by BOG should be refunded to ABFA account, as soon as practicable to prevent further withdrawal from the Ghana Stabilisation Fund (GSF) in 2015.
Fifty- five per cent of the 2014 ABFA allocation was not utilised as a result of the non-disbursement of the CBD loan for existing projects as well as the capping of the CBD facility during the latter part of 2014.” Prof Buah-Bassuah revealed.
On key findings of the 2015 semi report, the Chairman of PIAC noted that 55 per cent of the allocation to ABFA was used to service loans contracted for oil and gas infrastructure, 21 per cent allocated to build capacity, 20 per cent used for roads and other infrastructure, with four per cent for interventions to modernise agriculture.
Approximately 99 per cent of the allocation to capacity building priority area went to support interventions in the education sector with approximately 65 per cent being used to fund various social interventions, noting however, that no amount was made towards building the capacity of the oil and gas sector.
He told the participants that: “Only four per cent of the total ABFA went into agriculture modernisation with 61 per cent allocated to construct irrigation infrastructure.”
Again, he said, $213 million of the petroleum receipts was allocated during the period under review with $147.26 million disbursed to the ABFA and remaining 31 per cent ($66.33 million) going to the GNPC, adding that there were no transfers to the Ghana Petroleum Funds.
Prof. Buah Bassuah-continued: “Serious attention must be paid to the building of the capacity in the oil and gas sector so at to help ensure the realisation of local content targets set out in the Local Content Policy. Meanwhile, the capital allowances regime granted to companies on the oil and gas industry should be looked at again owing to the drop of crude oil price and its effect on the profitability of the companies operating in the sector.
On the viability of the Saltpond Oil Field, he called for a critical appraisal of the continuous operation of that Oil field against the backdrop of low crude price projected to hover around $52 in 2015, stressing that the business case for operating that field in 2015, had further been weakened considering that fact the oilfield produced a barrel of oil at a cost of $31.22 in 2014.
Meanwhile, during discussions, participants strongly suggested that to ensure the effective work of PIAC, its funding, which had been approved by Parliament, should be timely released to the committee, adding that projects like roads must ensure value for money.
From Clement Adzei Boye, Takoradi