The Public Interest and Accountability Committee (PIAC), has urged the Minister for Finance (MOF) to grow the Ghana Stabilisation Fund (GSF) in order to serve its purpose of shoring up Annual Budget Fund Amount (ABFA) expenditure when there are revenue shortfalls in the budget.

The PIAC made the recommendations in the ‘2021 semi-annual report on the ‘Management and Use of Petroleum Revenues’ released in Accra on October 7, 2021.

The GSF cushions the impact on public expenditure capacity as was witnessed in 2015, 2016, 2020 and first half of 2021. Last year, instance, government had to fall on the fund as the impact of COVID-19 pandemic led to low oil prices, which caused unanticipated shortfalls in petroleum revenues.

Read: PIAC advocates long-term national devt plan to guide petroleum revenue spending

Petroleum funds

The Ghana Petroleum Funds (GPFs) comprise the Ghana Heritage Fund (GHF) and the GSF. In terms of disbursement, the Petroleum Revenue Management Act (PRMA), stipulates that not less than 30 per cent of the benchmark revenue or actual petroleum revenue in any fiscal year should be paid into the GPFs.

In accordance with the law, a minimum of 30 per cent of the revenue accrued to the GPFs is transferred into the GHF and the balance transferred into the GSF.

The MOF has discretion, subject to parliamentary approval, to place a cap on how much can be accrued to the GSF as necessitated by macroeconomic conditions.

In so doing, the cap can be reviewed downwards when oil prices fall or upwards in periods of high oil prices.

Similarly, in the event of a national emergency, the GSF can be capped at a low amount and the excess transferred to the Contingency Fund, as established by the 1992 Constitution.

In the period under review, the cap placed on the GSF was maintained and the excess over the cap used to support the sustenance of the national economy, as a result of the impact of Covid-19.

Read: Time to address petroleum revenue management challenges - PIAC

Investment climate

According to the report, notwithstanding a slow recovery from the Covid-19 pandemic, Ghana, in the first half of 2021, witnessed some injection of investment by international oil companies (IOCs).

It cites that in April, Tullow Oil commenced implementation of its long-term business plan to unlock the full potential from the Jubilee and Tweneboa-Enyenra-Ntomme (TEN) fields through a multi-year, multi-well drilling programme.

In this campaign, Maersk Venturer drillship is expected to drill four wells in total in 2021, consisting two Jubilee production wells, one Jubilee water injector well and one TEN gas injector well.

Additionally, discussions with prospective investors are ongoing to promote Ghana as an attractive destination for investment, technology and a hub for refined petroleum products in the West African sub-region through the implementation of the Petroleum Hub project.

The 2021 Semi-Annual Report covers the period January to June 2021.

It encompasses a broad range of issues associated with petroleum revenue management such as information on production, liftings, total revenues accruing and allocation by government and the management of the funds set aside in the Ghana Petroleum Funds (Ghana Stabilisation Fund and the Ghana Heritage Fund).