Gov’t must adopt measures to properly analyze cost of petroleum contracts to avoid losses

The Public Interest and Accountability Committee (PIAC) is asking the government to adopt measures to thoroughly vet costs provided by international companies before petroleum contracts are signed.

In a 10-year assessment report on the petroleum sector, the Committee says this needs to be tackled with all seriousness to prevent wastage of money in the sector.

Commercial production of oil and gas in Ghana commenced in December 2010 following the discovery of the play-opening Jubilee Field offshore Ghana in 2007.

Since then, oil and gas production and exports have provided a critical boost to Ghana’s economy over the past ten years. It has become a fundamental component of the country’s industrial strategy and transition to a middle-income country, acting as the lever to provide jobs and energy security.

The Public Interest and Accountability Committee report titled, “Assessment of the Management and Use of Ghana’s Petroleum Revenues between 2011 and 2020”, assessed Ghana’s management and use of petroleum revenue between 2011 and 2020 in line with the requirements of Ghana’s Petroleum Revenue Management Act 2011 (Act 815, as amended by Act 893) and the Petroleum Revenue Management Regulations 2019 (L.I. 2381).

According to the report, Ghana earned about $6.55 billion from oil and gas production as of the end of 2020, equivalent to 9.97% of Gross Domestic Product.

Regarding the breakdown of the petroleum receipts by fiscal instrument, PIAC said carried and participating interest by far generated the highest share for Ghana, accounting for 58 percent or 3.8 billion dollars of the total revenue earned.

On the allocation of petroleum revenue inflows, the report revealed the Annual Budget Funding Amount received the highest amount of $2.6 billion (40%) over the period. This is followed by the Ghana National Petroleum Cooperation receiving $2.0 billion (30%); the Ghana Stabilisation Fund (GSF) receiving an amount of $1.39 billion (21%) of total revenues; whereas the Ghana Heritage Fund (GHF) received $586 million (9%) of the total allocation.