Ghana secured $866 million as returns on oil revenue invested since commercial production, according to the latest report on petroleum funds released by the Bank of Ghana.
Details of Petroleum Funds Report
The Heritage Fund which was established so that the country can save some money aside for future generations also contributed $485 million.
The report showed that as at the end of December last year Ghana’s share of Oil revenue which has been invested in government-backed securities outside the country stood at $866 million.
The stabilization Levy contributed $381 million dollars to the total investment return. The stabilization Levy was set up so that part of oil revenue secured is put into this fund so that government can fall on it to cushion consumers if petroleum prices go up significantly.
However the data showed some $206 million had been withdrawn from the fund. But checks with the Annual Petroleum Fund gave some explanation.
Withdrawals from the Ghana Stabilization Fund
The Petroleum Revenue Management Act (PRMA) allows for withdrawals from the Ghana Stabilization Fund (GSF) to support shortfalls in the ABFA and also allows the Minister for Finance to set a cap on the GSF and withdraw the excess over the cap for contingency and debt repayment.
In line with Section 23(4) of the (PRMA), the GSF was capped at $300 million in the 2018 Budget. Thus, in the second and third quarters, an amount of $77,681,757.40 million and $128,662,005.06 million, which were the excess amounts over the cap, were transferred into the Sinking Fund in accordance with Section 23(3) of the PRMA.
The Heritage Fund set up to save some of the Oil Revenue for future revenues, contributed $485 million ending December 2018.
Annual Petroleum Funds report from the finance ministry
Total petroleum receipts (i.e. proceeds from liftings and other petroleum receipts) as at December 2018 $964 million.
How the oil revenue is distributed
According to the fiscal regime covering the Petroleum Agreements (PA), the government is entitled to oil royalties on gross production equivalent to 5 per cent from the Jubilee and TEN Fields and 7.5 per cent from the SGN Field.
The PAs also grant Ghana Carried and Participating Interests (CAPI) of approximately 13.64 per cent and 15 per cent in the Jubilee and TEN Fields, respectively. CAPI for SGN is 20 per cent. Corporate Income Tax on upstream and midstream petroleum companies is 35 per cent.
The receipt of the proceeds from these and other sources of petroleum revenue is regulated by the PRMA, as amended.
The PRMA establishes the PHF as a designated Public Fund to receive all petroleum receipts, as defined in the Act, and provides the framework for the collection, allocation and management of the petroleum funds.
The PRMA requires that not more than 70 per cent of government’s net petroleum receipts is designated as ABFA and not less than 30 per cent designated as GPFs.
Out of the amount transferred into the GPFs, the GHF received not less than 30 per cent, with the rest transferred into the GSF.
In 2017, the government maintained the 2014-2016 formula for the distribution of petroleum revenues for 2017-2019. The priority areas for utilisation of the ABFA were however revised to reflect the Government’s medium-term policy objectives.
The Priority areas were revised in line with Section 21 (6) of the PRMA as follows:
- Agriculture
- Physical Infrastructure and Service Delivery in Education
- Physical Infrastructure and Service Delivery in Health; and
- Road, Rail and Other Critical Infrastructure Development.
Concerns about oil revenue investments
Some investment analysts have raised concerns about returns on these funds. But the government in previous years had argued that the current laws covering usage of oil revenue restrict it on areas that it can invest.
