The Public Interest and Accountability Committee (PIAC), an independent statutory body established under Section 51 of the Petroleum Revenue Management (PRMA) Act, 2011 (Act 815), has said it has observed that over the years, some International Oil Companies (IOCs) have developed the practice of non-payment and deferred payment of Surface Rentals, which is a source of petroleum revenue stream for the government.
This practice, according to PIAC, undervalues the Ghana Petroleum Holding Fund, and does not comply with the provisions of the PRMA.
Payment of surface rental fees, is regulated by the PRMA Act as part of petroleum receipts for any fiscal year.
Defaulting on due payments under the law attracts stipulated sanctions including penalties.
A statement signed by Noble Wadzah, Chairman of PIAC on Friday, August 14 said the body has also observed a loophole in allowing the Minister for Finance to place a cap on the Ghana Stabilisation Fund (GSF) at his or her discretion as necessitated by macroeconomic conditions; albeit with the approval of Parliament.
There is no established criteria for the determination of the cap and use of proceeds, the statement said.
“Another worrying trend is the non-utilisation of and accounting, for the full Annual Budget Funding Amount (ABFA) allocation even though the budgetary amount is disbursed to the ABFA account. PIAC’s visits to some projects earmarked to receive petroleum revenue revealed that they have been starved of funds at a time when revenues are reported to be unutilised and unaccounted for.
“The Committee also observes that over the years, some International Oil Companies (IOCs) have developed the practice of non-payment and deferred payment of Surface Rentals which is a source of petroleum revenue stream. This practice undervalues the Ghana Petroleum Holding Fund, and does not comply with the provisions of the PRMA.
“PIAC has observed a loophole in allowing the Minister for Finance to place a cap on the Ghana Stabilisation Fund (GSF) at his or her discretion as necessitated by macroeconomic conditions; albeit with the approval of Parliament. To place a cap on how much can be accrued to the Fund, there is no established criteria for the determination of the cap and use of proceeds.
“We note with concern that 10 years into oil, the effectiveness of an Investment Advisory Committee (IAC) is difficult to measure. The country is still stuck to the practice of investing in low qualifying instruments, a practice we believe can be better improved with a well-resourced, functional, and independent IAC. The advice of the IAC is not mandatory on the Minister for Finance, undermining the core essence of the IAC.
“It is important to note that though some of these issues have been consistently raised in the Committee’s annual reports over time, it has attracted little or less attention. 10 years into oil is an appropriate moment to reflect on how well or otherwise we have done with our oil.
“It is our belief that these issues will receive the needed attention among critical stakeholders. Mindful of the fact that our country’s resource governance is shaped by the thinking of political groupings (parties) and that these issues be given adequate attention in their manifestoes, policies and action steps.
“The understanding that petroleum is a finite resource, hence the need for effective governance must not be lost on us. Next year will mark the tenth anniversary of PIAC, and the Committee will roll out series of commemorative activities on the upstream petroleum sector and its governance.”
By Laud Nartey|3news.com|Ghana