The petroleum revenue management bill -my views

By Hon. A. Kan-dapaah
(Member of Parliament and Chair, Public Accounts Committee)

“we need this Bill if Ghana is to avoid the costs associated with the alternative options of leaving the revenue to be collected and accounted for as part of conventional revenue”.

Hon. A. Kan-dapaah

I am delighted that we do have for consideration in our Parliament, a Petroleum Revenue Management Bill. To me personally, it brings back memories of the successful efforts of the Kufuor government to bring finality to GNPC’s search for oil in our country.

As President Kufour’s first Minister of Energy, I participated in those efforts, and I recall the passion with which the President handled the delicate issues involved. I congratulate all those who have contributed in crafting this Bill. This exercise started under President Kufuor and President Mills is finalizing it.

I am impressed about the wide public consultations and the extensive participation of civil society and academia. We need a petroleum revenue management legislation. The memorandum to the Bill has done a good job detailing why we need this Bill.

One justification in the memorandum which excites me is that “we need this Bill if Ghana is to avoid the costs associated with the alternative options of leaving the revenue to be collected and accounted for as part of conventional revenue”.

This is a frank admission which I admire and I will come back to this shortly. But even though I am excited about this Bill, I must say that I have some disappointments.

Exploration and Productionlegislation

Notably, I am disappointed that we have to discuss this Bill in the absence of an Exploration and Production legislation. We need to learn to do things properly. In the natural order of things, ‘B’ must follow “A”. ‘A’ must not be made to follow “B”.

It is wrong and there can be no justification that we are considering a petroleum revenue management legislation when there is no petroleum exploration and production legislation.

The former must flow from and be responsive to the latter. Equally disturbing is the lack of input from a Petroleum Commission as demanded by Act 269 of the constitution to co-ordinate all policies related to the regulation and management of petroleum. These were avoidable lapses which we could have prevented.

As quoted above, a stated objective of this legislation is to learn from the costly mistakes of the past. One area where we have made costly mistakes is in the area of financial accountability. Financial accountability in this country has been awful. The accounting module in our public financial management system has never worked. Indeed, there does not appear to be any such module.

The result is that our MDA’s have consistently been unable to capture and record all accounting transactions to be able to prepare year-end financial statements. As a result of this and the persistent refusal of our accounting officers to follow laid down internal controls and internal checks, the reports of the Auditor General continue to contain series of cash, accounting and procurement irregularities.

We cannot put our Petroleum Revenue through the same system, and I am glad by the desire to have a better way of accounting for oil revenues.

Government should revamp its mechanisms for accountability. I have listened intently to the debate on the need for a second layer of accountability as proposed in the bill. This is a demand not by the drafters of the bill but our publics, the people we represent in Parliament. 83% of the people surveyed demanded a separate public oversight committee.

This is a serious indictment of our political class. The paradox, as has been observed elsewhere, is that while we hail the victory of democracy in our country, parliament which is the central institution of democracy faces crisis of credibility.

Democratic parliament must answer 3 key characteristics. It must be perceived to be transparent, accountable and the love of its members for nation must transcend their love of party. The verdict from our publics is that we have failed in these areas. We should not fight them. For this reason, I shall vote for the Clause which demands a second layer of accountability to complement the oversight function of Parliament.

An interesting issue which has generated very lively debate is whether, given the state of our economic infrastructure and the huge budget deficits, we have to reserve something for the future generation. Again, wouldn’t the future generation appreciate another three or four Universities for Ghana more than cash sitting in a foreign bank and paying us less interest than what we pay on our borrowings?
On the other hand, some have questioned whether it is appropriate for us to decide for the future generation how they should use their money. I have listened to a number of views on this matter and I believe that everything considered, it will be wise to have a heritage fund of at least 10%.
Should we cede a percentage of the oil revenue to the people of the Western Region? Well that is as tricky as it is delicate. We should learn from experiences elsewhere. In this connection, I must admonish that Nigeria is too close to us to ignore their experiences. For this reason, I strongly urge the House to have a way to accommodate the demands of the Western Region. As they say, a word to the wise is enough.
What is this talk about allowing Government to use future revenues as collateral for Government borrowing? This must be discouraged. Don’t let us draw comparisons with cocoa. The cocoa farm lands in Ghana are not owned by the State. They belong to property owning individuals. The oil belongs to the State.
Furthermore, the essence of this Bill is to avoid treating Petroleum revenues “in our usual way of doing things.” Let us listen to the people.  There can be no justification for oil backed loans, given the spirit behind this Bill.
The Bill envisages that a long-term national development plan will be in place and be implemented through successive medium–term expenditure frameworks, aligned with annual budgets. This is highly commendable and must be seen as a wake-up call to resource and take the National Development Planning Commission seriously.
One valid issue that has been raised in recent times is whether in the face of this oil discovery, we as a country are safe.
There are certainly a couple of security challenges to be addressed. Both external and internal security challenges. Government should accept this reality and continue with the bold efforts of the Kufuor administration to resource the security agencies.
Finally, in the Memo to the Bill we are reminded that a guiding principle of the Bill is the need to ensure that the spending of petroleum revenue enhances the productive capacity and productivity of the non-oil sector.
This, incidentally, is in line with the consistent admonition of the NPP Flagbearer, Nana Akufo Addo, for us to shift focus from what he calls the “Guggisberg Economy” to a transformed economy that is based on the production of value added goods backed by knowledge and technology driven service industries.

primary development objective
As he puts it, “the primary development objective for the Ghanaian economy must be single minded focus on its structural transformation”, and that “the economic importance of this oil find is that it must help in a structural transformation and get us to move away from the production of yet another raw material.
It is to me a matter of great regret that in spite of the statement in the memorandum there is nothing in the body of the Bill to give effect to the need to use our oil revenues to transform our economy.
This must be seen as a challenge to our Parliamentarians to find ways during the consideration stages to inject some amendments to cure this defect.

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