The latest annual report of the Public Interest and Accountability Committee – the statutory body established to monitor petroleum sector revenues and expenditures – covering 2019 has revealed major legal infractions with regards to how the state’s share of petroleum sector revenues accruing during the year has been used. Even more worrying is the fact that these infractions have occurred for the third consecutive year suggesting that the illegalities have become a “norm”. Worst of all, no efforts are being made by the relevant legal compliance and enforcement institutions of state to correct the situation and sanction the offenders.
The biggest infraction is that in 2019, out of the Annual Budget Funding Amount of GHc2,750,840,639.72 available for spending, only GHc1,270,944,399.86 was actually utilized and the balance of GHc1,479,896,299.86 was not only not utilized, it remains unaccounted for. This is the third consecutive year that the ABFA was not fully utilized and the unused balance has not been accounted for.
The PIAC does not have legal authority to sanction offenders as allowed for under section 58 of the Petroleum Revenue Management Act and the institutions of state that do – such as the Attorney General’s Department, the Economic and Organized Crime Office, and the Office of the Special Prosecutor – have failed to initiate action towards sanctioning them. Sanctions prescribed by law range from fines of between 250,000- and 500,000 penalty units and jail terms of between 7 – 15 years, or both.
The other major infraction is that in 2019, 45.14 percent of the actual ABFA was spent on recurrent expenditure and 54.86 percent was spent on capital expenditure in violation of the PRMA which demands that at least 70 percent of the ABFA is spent on capital projects. Indeed, 2019 was the second consecutive year during which no allocation was made from the ABFA to the Ghana Infrastructure Investment Fund (GIIF) contrary to the provisions of the GIIF Act.
The latest report singles out the Ghana National Petroleum Corporation for scathing criticism, complaining that even as the corporation spends heavily on corporate social responsibility initiatives, it fails to meet cash calls from its partners in oil and gas field development for investment in the projects where it represents the equity interests of the state. Consequently, those partners (such as Tullow Oil, Kosmos Energy, ENI and the other equity partners in operating oil and gas fields) have resorted to using the proceeds of what should have been GNPC’s oil liftings to secure the corporation’s called in investment capital. Thus, for instance, only one of the three liftings from the Sankofa Gya Name field during 2019 actually gave GNPC revenue; its proceeds from the other two were used by its partners, led by ENI to cover its investment cash calls which it had failed to meet.
Altogether in 2019, there was a 15 percent increase in crude oil production from 62,135,435.07 barrels in 2018 to 71,439,585 barrels last year, which exceeded the target oil output of 63.4 million barrels.
Gas production did even better – total production of 169,508.61 million standard cubic feet (mmscf) from all producing fields in 2019 was 85 percent higher than 2018’s volume of 91,459.30 mmscf. However, despite GNPC’s commendable efforts to secure more gas off takers more than half of the gas produced (56.87 percent) had to be re-injected or flared
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