‘Other infrastructure’ not defined under oil-funded projects
The Executive Director of the Kumasi Institute of Technology, Energy and Environment (KITE), Mr Ishmael Edjekumhene, is calling for a clear definition of ‘other infrastructure’ captured under the priority areas of the Annual Budget Funding Amount (ABFA).
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This unclear definition, according to him, provides the leeway for government to utilise revenues on projects that are not budgeted for and are subsequently captured as ‘other infrastructure’. Roads and other infrastructure is one of the priority areas on which revenues allocated to the ABFA is spent.
In an interview with the GRAPHIC BUSINESS after a policy dialogue on the prioritisation of the ABFA for the period 2017-2019, he said the concept of ‘other infrastructure’ was becoming increasingly prominent, a move which stakeholders believe does not inure to the prudent management of oil revenues.
“It is interesting when you look at how monies are allocated under roads and other infrastructure. For instance in 2011, all the allocation went into roads and highways as there was no infrastructure sponsored in 2011,” he said.
He added that “it started getting murkier as the years went along. In 2012, only 33 per cent of the allocation went into roads; all the rest went into other infrastructure. In 2013, 64 per cent went into roads and the rest went into other infrastructure.”
Cumulatively, Mr Edjekumhene said from 2011 till date, only 49 per cent of the allocation went into roads and the remaining 51 per cent had been channelled into other infrastructure, which has not been defined clearly.
Other areas of concern
He said some of the priority areas that received ABFA funding were also not clear, citing agriculture modernisation and capacity building.
“They have what they call agriculture modernisation, which in itself you can have so many issues with. Then we have roads and other infrastructure and then you have amortisation of loans which is quite straightforward, but then the trickiest one is capacity building,” he said.
Touching on capacity building, he said some of the things done in the name of capacity building were worrying as not much was being done in building human capacity in the oil and gas sector.
“If you want to define capacity building, let us be specific. If it is in oil and gas, we want to train a specific number of people, but not using disguised expenditure for all sorts of groups and all sorts of sectors under capacity building,” he said.
He added, “Strangely we are not building a lot of human capacity under the priority area, bulk went into social interventions in the education sector. Let us get them to define what they mean by capacity building.”
ABFA allocations
The Petroleum Revenue Management Act (PRMA), 2011 (Act 815) stipulates that the spending of the Annual Budget Funding Amount (ABFA), which is the proportion of petroleum revenue that goes into the annual budget, should be guided by a medium-term development framework aligned to a long-term national development plan approved by Parliament.
The PRMA also provides a list of 12 broad areas from which the Minister of Finance is obliged to select not more than four in the event that a long-term national development plan happens not to be in existence so as to maximise the impact of petroleum revenues. Act 815 further requires that the priority areas once selected cannot be changed until after three years after the initial prioritisation.
The same priority areas were maintained by the Minister of Finance in 2014 for another three years. This year marks the end of the second three-year ABFA cycle, with the Minister of Finance expected to submit another programme for the use of petroleum revenues for the period 2017-2019 to Parliament.
Government has over the years allocated to the ABFA on the four priority areas, namely: amortisation of loans for oil and gas infrastructure, roads and other infrastructure, agriculture modernisation and capacity building (including oil and gas).
Policy dialogue
The policy dialogue was organised by KITE, in collaboration with the Africa Centre for Energy Policy (ACEP) and the Ghana Centre for Democratic Development (CDD-Ghana), as part of a project on “Examining Transparency and Accountability within the Oil and Gas Sector: Impact Evaluation of Key Provisions in Ghana’s Petroleum Revenue Management Act.”
The forum was to kick-start a civil society-led national discourse to elicit views and opinions from a cross section of Ghanaians on how best petroleum revenues could be utilised to engender maximum impact as envisioned by the framers of the PRMA. — GB