Ghana’s oil industry, once a beacon of hope for the country’s economic development, is facing a crisis. According to the latest report from the Public Interest and Accountability Committee (PIAC), crude oil production has declined for the fourth consecutive year, with an annual average decline of 9.2%. This is a worrying trend that threatens the country’s ability to generate revenue from its oil resources.
But production decline is only part of the problem. The PIAC report also reveals that a significant amount of revenue from oil liftings has not been paid into the Petroleum Holding Fund (PHF) for the second consecutive year. This amounts to a staggering US$343,108,927.88 in unpaid revenue.
Furthermore, the report highlights questionable disbursement practices, including the transfer of US$108,750,000 to the Ghana Infrastructure Investment Fund (GIIF)-SPV Viability Fund instead of GIIF, contrary to the Petroleum Revenue Management Act (PRMA).
On a positive note, the report notes that the District Assembly Common Fund (DACF) received US$24,298,598.18, representing 5% of the 2023 ABFA, in compliance with the Supreme Court’s decision.
However, the report also raises concerns about the allocation of resources to priority areas. The Industrialisation Priority Area, for instance, has seen a significant reduction in allocation and disbursements, from 1.15% in 2020 to 0.11% in 2023.
The PIAC report makes several recommendations, including the need for government and regulatory bodies to address production decline, ensure investments in unexploited fields, and address GNGLC’s indebtedness to GNPC. Additionally, the report urges the transfer of ABFA to GIIF, intensification of efforts to recover Surface Rental arrears, and guidance of ABFA Priority Areas by a long-term national development plan.
Overall, the PIAC report paints a worrying picture of Ghana’s oil industry, highlighting the need for urgent action to address production decline, revenue management, and allocation of resources to priority areas.
By Benson Afful
