Parliament last week approved the Petroleum Revenue Management (Amendment) bill 2015, which is expected to help the country efficiently manage revenue from crude oil and also empower government to set aside proceeds from crude oil sales for infrastructural development.
The new bill, which has been passed to fix lapses in the management of oil revenue under the previous legislation, is also needed to help government channel revenue from crude oil into the Ghana Infrastructure Fund — set up to deal with the huge infrastructure deficit and focus on strategic infrastructure that will lead to job-creation and increased growth of the economy.
Conservative estimates indicate that the country’s huge infrastructure deficit requires sustained spending of at least US$1.5billion per annum over the next 10 years to address the shortfall in provision of infrastructure in the roads, energy, water, aviation, housing and ICT sectors.
The amended bill passed by the country’s 275 legislators has been described by chairman of the finance committee of Parliament, James Avedzi, as necessary to ensure a constant flow of money into both the Stabilisation and Heritage Funds.
“Now we have passed the law that will ensure sustained flow of revenue to both the Stabilisation and Heritage Funds, which hitherto was a challenge. Now that we have amended the previous law, we can be assured that significant amounts of revenue will be dedicated to these funds for future needs. The President now has to give assent to make it legally binding,” he told B&FT.
The bill essentially seeks to secure a revenue stream to the Heritage and Stabilisation Funds, and to ensure prudent use of the country’s oil revenue.
The Ghana Stabilisation Fund and Ghana Heritage Fund, collectively known as Ghana Petroleum Funds, are expected to receive from petroleum revenue in excess of the annual budget funding amount.
The bill went through different stages of review in the House, amidst several changes to the original clauses that make up the Act.
It also seeks to amend the existing Act to provide for allocation of Funds for the Ghana Infrastructure and Investment Fund (GIIF), address issues with the Ghana Stabilisation Fund, the benchmark Revenue projection, and further empower the Ghana National Petroleum Company (GNPC) to become a commercial entity and a strong operator in the oil and gas sector.
The Deputy Minister for Finance, Cassiel Ato Forson, said the various amendments will not only correct typographical and other errors in the Act, but also ensure a continuous flow of revenue from the petroleum sector.
He pointed out that the amended version of the petroleum revenue management regime will provide for allocation of revenue to the Ghana Infrastructure Fund for the purposes of infrastructure development.
The Chairman of the Committee, James Avedzi, said the amendment was to provide for composition of the Investment Advisory Committee.
Some of the amendments in the Act include a provision to provide for the Ghana Petroleum Funds to receive from the Petroleum Holding Fund not less than 30 percent of the Benchmark Revenue, as well as transfer of funds from the Stabilisation Fund to be done for the purpose of alleviating shortfalls in actual petroleum revenues in accordance with the Act.
It also provides the procedure for transfers into the Contingency Fund, and also transfers for the purposes of debt repayment.
James Avedzie further explained: “If in a particular year the benchmark revenue is US$100million by the new formula, 70% of the money will go into the annual budget funding amount (ABFA) and the remaining 30 million will be shared between the Stabilisation Fund and Heritage Fund”.
MP for Old Tafo and Ranking Member on the Finance Committee, Dr. Anthony Akoto Osei, in a contribution said even as the amendment is being made to empower GNPC, it is important for the corporation to be accountable to Ghanaians.