Petroleum revenue up 18% despite dip in production

The country is urging closer to a GH¢3billion deal with the International Monetary Fund (IMF), following a successful closure of the Domestic Debt Exchange Programme (DDEP).
Ken Ofori-Atta: Photo credit: Information Ministry/Facebook

High global crude oil prices saw the country record an 18 percent rise in petroleum revenues, despite production falling by same 18 percent last year.

Total 2021 annual crude oil production declined from 66,926,806 barrels in 2020 to 55,050,391 barrels, according to data from Public Interest and Accountability Committee (PIAC). This is regardless of the rebound of economic activities in 2021, after the easing of COVID-19 restrictions.

On the revenues front, however, the country did not feel the pinch of lower production volumes, as total petroleum revenues rose from US$666million in 2020 to US$783million in 2021 due to higher crude oil prices.

The increase was also helped by Surface Rental Arrears, which went up 22.22 percent from US$2million in 2020 to US$3million in 2021, according to the latest annual report by PIAC, a state watchdog of the use and management of petroleum revenues.

For the first time since the country started receiving petroleum revenue in 2011, the report said the District Assemblies Common Fund (DACF) received an amount of GH¢32million, following the 2019 decision of the Supreme Court in the case of Kpodo vs. The Attorney-General.

It, however, said the disbursement made was 1.74 percent of the Annual Budget Funding Amount (ABFA) – amount of oil revenue that goes to support government budget, instead of the 5 percent specified in the Supreme Court judgement.

“Although the Ministry of Finance made a disbursement of the ABFA to the DACF, there was no report on the utilisation of the amount,” PIAC lamented, adding: “PIAC recommends strict compliance with the 2019 judgement of the Supreme Court in the case of Kpodo vs. the Attorney-General, which stipulates that 5 percent of the ABFA shall be allocated and disbursed to the DACF”.

Among the report’s other findings, it said after a 3-year break, allocations to the Ghana Infrastructure Investment Fund resumed in 2021, with an amount of US$49million following the passage of the Ghana Infrastructure Investment Fund (Amendment) Act, 2021 (Act 1063).

It also revealed a disturbing development, stating that for the first time since 2011, GH¢13million of the ABFA was used to pay a judgement debt under the roads, rail and other infrastructure priority areas during the period under review.

Similarly, in 2021, it said the Ghana National Petroleum Corporation (GNPC) spent US$640million on the Maritime Boundary Special Project, and cumulatively, a total of US$12million on maritime boundary related activities, even though the Ghana Boundary Commission is responsible for such activities.

Meanwhile, GNPC failed to realise its budgeted revenue from loans and guarantees amounting to US$127million out of an accumulated total of US$318million owed the corporation by government and its agencies since 2011.

On this matter, PIAC said GNPC should double up efforts at recovering loans to government and its agencies to ensure that the corporation’s work programme does not suffer from non-implementation, and that the corporation should discontinue granting loans and guarantees until significant recoveries are made with respect to outstanding loans and guarantees owed it.

It further revealed that four of the 18 subsisting Petroleum Agreements were terminated by the Petroleum Commission in 2021 for non-performance in their minimum work obligations.

“While the Committee commends the Petroleum Commission for terminating the agreement of four contractors for non-performance, PIAC urges the commission to ensure strict compliance with minimum work obligations by international oil companies,” it advocated.

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