Disaster plan needed for extractives sector — GhEITI report
The Ghana Extractives Industry Transparency International (GhEITI) has recommended the development of a Disaster and Epidemic Preparedness and Response Plan for extractive companies and metropolitan, municipal and district assemblies (MMDAs).
This is to guide the formulation of future disaster response strategies.
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It said the number of health facilities across the country should also be increased to adequately manage future pandemics.
The recommendation was contained in a study by GhEITI after it assessed the “Effects of COVID- 19 on the Petroleum and Mining Sector in Ghana.”
The study findings are intended to be used by stakeholders, both to support their recovery from the pandemic and prepare for future uncertainties.
Some findings
It emerged that due to the pandemic, extractive sector governance and statutory obligations (companies): governance mechanisms including routine engagement with community members, local authorities and stakeholders, were all suspended to reduce the risk of contracting the virus.
“For instance, application for permits and follow-up verification visits were hindered as a result of COVID-19 measures, including movement restrictions and closure of regulatory agencies’ offices.”
“At the sub-national level, local-level engagement between MMDAs and communities, which provided the platform for addressing mining communities’ grievances, were irregular,” it said.
According to the study, the slowdown of economic activities by the pandemic affected revenue mobilisation efforts of sub-national governments and hindered the delivery of public goods.
District Assembly Common Fund (DACF) releases to MMDAs were also severely constrained by the impact of the pandemic on central government revenue mobilisation and expenditure.
The study, however, revealed that mineral royalties were the most consistent government revenue stream for MMDAs during the pandemic.
Extractive sector
The study states that the extractive sector is a significant contributor to Ghana’s economy, and contributes about 14 per cent of the gross domestic product with more than 67 per cent of the economy’s incomes from export emerging from the sector.
Additionally, about 50 per cent of externally sourced investments into the economy come from the sector. Regarding tax revenue, the sector contributes the most. It accounts for about 18 per cent of government revenues, while contributing about two per cent to the country’s employment.
COVID-19 on production
Crude oil production in Ghana is sourced from the Jubilee, Tweneboa Enyenra, Ntomme (TEN) and Sankofa Gye Nyame fields.
According to the study, in 2020, a total of 66,926,806 bbls was produced from the three producing fields, representing about six per cent decline compared to the 2019 production figure of 71,439,585 bbls. This was as a result of production decline on the Jubilee and TEN fields.
As price of crude oil tumbled on the global market, petroleum revenue shortfall was inevitable. Crude oil benchmark price was reset to US$39 instead of its projected US$62.90 at the start of 2020.
“Overall, petroleum receipts declined to US$666.4 million (GHȻ3,838 million) in 2020, compared to the receipts of US$937.6 million (GHȻ4,899.91 million) in the same period in 2019.
“Declining petroleum revenues also affected transfers to the Ghana Heritage Fund (GHF) and the Ghana Stabilisation Fund (GSF). The GSF lost about US$1.9m of possible revenue, while the GHF and the Ghana National Petroleum Corporation (GNPC) lost between US$78m and US$110m respectively in transfers.