PIAC: 10 Years on – The Success Stories & Challenges 

The Public Interest and Accountability Committee (PIAC) was established in 2011 under Section 51 of the PRMA, to monitor and evaluate compliance with the Act. The Committee was inaugurated and commenced work on 15th September, 2011.

Since its establishment in September 2011, the Public Interest and Accountability Committee, (PIAC), has been mandated with the oversight responsibility of monitoring and evaluating the management of Ghana’s petroleum revenue by the Government and relevant state institutions.

The Committee’s reports aim at keeping Ghanaians and other interested stakeholders constantly informed on how the country’s petroleum revenues are being managed, as well as providing platforms for the citizens’ feedback to be collated and shared with policy makers.

LET’S ENJOY SOME OF THE KEY FINDINGS OF PIAC IN ITS 2016 REPORT. VERY INTERESTING

P E T R O L E U M   R E C E I P TS 2016

Actual petroleum receipt in 2016 of US$247.18million was 29% lower than the budgeted amount (US$348.42 million) and translates to 38%year-on-year decline in annual petroleum revenues when compared to the 2015 receipts of US$396.17 million; except for CIT which exceeded target, none of the other sources of petroleum revenues achieved set targets,

Only five (5) out of the 18 licence holders paid surface rental during the period under review;.

Ninety-two percent (US$27.31 million) of total CIT received in 2016 was in respect of tax liabilities that Tullow ought to have paid over the period 2011-2014;

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Only US$9.35million (16.45%) out of total receivables of US$56.79 million from the sale of raw gas was paid by the off-taker –GNGC –in 2016; Payment of the outstanding receivables for 2016 would have reduced the revenue shortfall of US$101.24 million by 46% while the shortfall would not have arisen had the total outstanding indebtedness of GNGC of US$135.49 million been honored during the period under review

 ALLOCATION AND UTILIZATION OF PETROLEUM RECEIPTS 2016

A total of US$229.03 million (representing approximately 93% of total petroleum receipts) was allocated during the reporting period;

An amount of US$98.38million(GH¢388.85 million) (representing 70% of the net amount of US$140.54 million transferred to the GoG for further distribution and 42.95%of actual disbursement) was transferred to the ABFA account in 2016;18.

The remaining 30% (US$42.16 million) of the amount received by GoG to be distributed to the ABFA and GPFs in 2016 was transferred to the GPFs with the GSF receiving US$29.51 million (70%) and GHF receiving US$12.65 million;

UTILIZATION OF ALLOCATION TO GNPC 2016

The GNPC received US$88.50 million (representing 38.64% of total petroleum receipt) in 2016 compared to the US$126.86 million it received in 2015, translating to a year-on-year drop of 30%;20.

The allocation to GNPC during the review period is the lowest it has received since distribution of petroleum revenues begun in 2011.

For the first time since 2011, the disbursement to GNPC was insufficient to cover the NOC’s equity financing requirement and expenditure on other exploration and development projects embarked upon in the course of the reporting period.

This means that GNPC had to rely on its cash reserves, which had been earmarked for milestone projects, to fund equally important expenditures such as staff cost, general Operational and administrative expense and the cost of the maritime boundary dispute with Cote D’Ivoire

An amount of US$12.64million (classified as ‘capital projects’) was spent refurbishing GNPC’s landed properties in Accra, Tema and Sekondi-Takoradi; 23.There was a 38% year-on-year increase in the remuneration for Technical and Petro-business support staff employed to execute GNPC’s work programmes. The cost rose from US$10.23 million in 2015 to US$16.4 million in 2016; 24.

There was a 56% increase in the amount of money spent contesting the Maritime Boundary Dispute with Cote D’Ivoire at the ITLOS with expenditure rising from US$1.81 million in 2015 to US$2.83million in 2016; 25.An amount of US$7.58 million was again spent on the Western Corridor Road Project

RECOMMENDATIONS

Based on the key findings and some observations/conclusions made/drawn, PIAC has put forth the following recommendations for the consideration of the relevant authorities:

Given that the GNGC may well have been caught up in the vicious cycle of the indebtedness of the energy sector utilities (which stood at US$2.4 billion at the end of 2016), urgent and drastic measures would have to be devised by all key stakeholders to ensure immediate payment of the outstanding receivable owed the Ghana Petroleum Fund in respect of gas sales.

One potential source of funds that could have been used to defray VRA’s indebtedness to GNGC is the Power Generation and Infrastructure Support Sub-Account (PGISSA)1established under the Energy Sector Levy Act, 2015 (Act 899). However, the proceeds going into the PGISSA have been earmarked for the repayment of the debt owed by VRA to 11 domestic banks as part of the strategy introduced by the government to deal with legacy debt problem facing the State-owned energy sector utilities.

Since termination of supply to VRA is not an option as yet, due to lack of alternative market for lean gas, PIAC is calling for an immediate meeting between the Government, GNPC and GNGC to agree on a clear roadmap for the clearing of VRA indebted ness to GNGC;2.

The Ghana Revenue Authority (GRA) must ensure that all outstanding annual surface rentals are paid with interest;3.GRA must ensure that auditing of tax returns filed by the Jubilee Partners are carried out expeditiously so that any additional assessment payable is paid on time;4.The Bank of Ghana and/or the Ministry of Finance should seek expert advice on hedging and consider undertaking hedging activities as part of strategies to mitigate Ghana’s exposure to commodity price risk/volatility associated with future oil production;5.GNPC needs to be impressed upon to procure a Loss of Production Insurance (LOPI) or Business Interruption Insurance if it does not have one already;

EVENTS FROM 2016 TO 2019

In 2019 PIAC under the chairmanship of Dr Steve Manteaw discovered that government was using oil revenue to acquire loans

Dr Manteaw warned against it and appealed to the Government to desist from using the nation’s petroleum resources as collateral for loans.

After its inspection of the beneficiary project areas, Dr, Steve Manteaw indicated that, the state lost about $1.2 billion dollars to the supposed non-existent oil-funded projects.

Chairman of PIAC, Dr. Steve Manteaw, in an interview, said his outfit had written to the Finance Ministry seeking clarifications on the matter while calling on the Auditor General to look into the findings.

“On these visits, we discovered, to our dismay, that about half of the projects were either non-existent or poorly executed,” Dr. Manteaw said.

As an example, he noted that “there was a particular case of the Duuri Dam where an amount of about GHc 58,000 was allocated for rehabilitation works. The allocation was done in 2014, but as at 2016 when we visited the project site, nothing had happened. The project was actually non-existent.”

“There is also the case of Nakore dam in the Wa central municipality. There was the Farikiya Islamic school in Tamale. Again, when we visited [these sites], the projects were nonexistent,” he added.

Also in 2019 (PIAC) faulted the Finance Ministry for including some unspent ¢440 million from 2017 in the year’s budget expenditure.

PIAC described as misleading a claim by the Ministry that the ¢ 440 million unspent oil revenue in 2017 was part of its ¢ 1.5 billion budgetary expenditure for the year.

In its supplementary analysis of Annual Budget Funding Amount (ABFA) for 2018 semi-annual report, PIAC said the Ministry confirmed in a meeting that, the ¢440 million outstanding balance from 2017 was not part of the approved expenditures for 2018 under the Appropriation Act for that year.

PIAC explained that the ¢1.55 billion which the Ministry claimed was its programmed ABFA expenditure for 2018, represented 70% net petroleum revenues.

PIAC explained that the programmed amount was exclusive of the ¢440 million outstanding balance from 2017.

2021 FROM PRESIDENT AKUFO-ADDO

The President of the Republic, Nana Addo Dankwa Akufo-Addo, has reiterated Government’s support for the work of the Public Interest and Public Interest and Accountability Committee (PIAC), the organization tasked with monitoring and evaluating compliance with the Petroleum Revenue and Management Act (PRMA) by government and other relevant institutions in the management and use of petroleum revenues and investments.

Speaking at the 10th anniversary celebration of PIAC, at a ceremony held at the Kempinski Hotel, in Accra, President Akufo-Addo stated “that relations between PIAC and Government, which were in the past, at times, somewhat stormy, have, at least since I took office in 2017, been largely cordial and fruitful, and this has resulted in the prudent use of our nation’s petroleum revenues for the welfare and benefit of the Ghanaian people.”

According to the President, Government, since 2017, has ensured that, unlike in the past, the budgetary allocations of PIAC have been released to enable it undertake its activities.

“In 2020, for example, an amount of GH¢3.1 million was given to PIAC, with GH¢2.35 million set to be released for this year, in spite of the pandemic,” he said.

Indeed, the President revealed that PIAC utilized a part of its 2018 budgetary allocation to procure its current office building at East Logon, in Accra, which brought an end to the era of evictions and threats of eviction by landlords.

“For as long as I remain President, support to PIAC will be forthcoming and on time,” he assured.

President Akufo-Addo urged PIAC, “now more than ever”, to continue to engage Government and relevant stakeholders, and help work towards the economic transformation of Ghana through the efficient use of the country’s hydrocarbon resources.

“Government is committed to its continued solidarity with PIAC, and assures it of Government’s considerable interest in all of its activities. I am hopeful that the co-operation between Government and PIAC will be deepened even further in the coming years for the goal of a united, progressive and prosperous Ghana,” the President added.

Touching on the relations between PIAC and the Ministry of Finance, he noted that delays in transmission of information between the two entities, emanating from the distortions in the deadline schedules of the reporting obligations of the two institutions, have led to the stoking of controversy.

Towards the resolution of this, the President advocated for an amendment of the relevant provisions in the Petroleum Revenue Management Act.

“I will, in conclusion, urge the Ministry of Finance and PIAC to rekindle the holding of their quarterly meetings to ensure that issues of mutual interest and concern are addressed through dialogue. I also appeal to PIAC, in its publications, to help provide the general public with a better understanding of how petroleum resources are managed, and clarify swiftly its position on matters should it be misconstrued in the media space,” he added.

In my opinion, PIAC should continue to engage government to attain prosecutorial powers to enable it process individuals and institutions that have been found to have misappropriated oil revenue to court for prosecution. After ten years of operations in monitoring and evaluation, I think PIAC has performed well to the satisfaction of Ghanaians in promoting transparency and accountability with regard to the management of oil revenue. However, as Oliver Twist would say, Ghana needs more commitment of the people who have been mandated to open their eyes on our politicians and demand transparency in oil revenue management. Happy 10^th Anniversary to You.

By Adu Koranteng