PIAC calls for immediate evaluation on all oil funded projects

The Public Interest and Accountability Committee (PIAC) is asking government to urgently conduct an immediate evaluation of the effectiveness and impacts of all the projects and programmes that have been funded with the revenues from the petroleum sector.

This will ensure that the impact of such programmes can be visibly acknowledged by stakeholders and also save the nation from the problem of cost escalation which extended project durations inevitably occasions.

“We are aware of the fact that some of the monies have been used to defray debts while others have been used to complete projects already under construction and when that happens, we are unable to see what the value of the oil proceeds are.

“Government must consider using proceeds from the country’s oil resource on projects that the citizens can easily identify,” Mr. Yaw Owusu Addo, a member of PIAC told journalists at a three-day workshop organised by the Institute of Economic and Financial Journalists (IFEJ) with support from the German Development Coorpration (GIZ).

The workshop, among other objectives discussed the 2013 report of PIAC, the first in the series by IFEJ for the year and meant to expose financial journalists to reports and happenings in the extractive sector of the country to enable them to better scrutinise developments as far as the oil and gas sector is concerned.

Mr. Addo, reviewing the 2013 PIAC report, called on government to focus its expenditure under the capacity building priority area on interventions that will directly enhance the capacity and capabilities of the Ghanaians to play a bigger role in the oil and gas industry as envisioned in the local content policy and regulations.

Total petroleum revenues in 2013 was US$846,767,184 converted to yield GH¢1, 645, 585,763 bringing cumulative revenue received since 2011 to US$1.833 billion equivalent to GH¢3.291billion.
In 2013, the Annual Budget Funding Amount (ABFA) was allocated to four priority areas which include; agricultural modernization had GH¢13.60million representing 2.5 percent, Roads and Other Infrastructure, received GH¢372.07 million representing 68.40 percent, and Amortization of loans for energy sector also had GH¢137.92million also representing 25.5 percent and capacity building receiving 20.18million also representing 3.0 percent.

He observed that the capacity building priority appears to be a category under which certain expenditure items which may not be related to capacity building have been classified.

During 2013, approximately GH¢23 million representing 17 percent of the ABFA earmarked for capacity building from 2011 to 2013 went into consumables such as goods and services for Ministries of Food and Agriculture and Lands and Natural Resource and NADMO relief items.

Again, GH¢2million of the monies meant for capacity building was used to support the creative industry while another GH¢8.1 million was given out as cash transfer under the Livelihood Empowerment against Poverty (LEAP).

About GH¢35million was allocated to Microfinance and Small Loans Centre while another GH¢ 19 million has been used to set up Venture Capital Fund and Exim Guarantee Fund.

In spite of these, only GH¢8.93 million representing 6.7 percent of the total allocations to the capacity building priority area has gone into developing capacity in the oil and gas sector over the 3year period between 2011 and 2013.

On the road sector, he said, the sector has benefitted the most from the funds allocated from ABFA in 2013 with over GH¢239.23million disbursed on 63 roads and ancillary works.
This brings to 118 the total number of roads supported by ABFA since 2011 at a total cost of GH¢544.92 million.

The share of ABFA allocated to road projects accounted for only 14.1 percent of road sector budget in 2013 and is expected to account for 17.9 percent in 2014, and has therefore been used largely as partial funding for the beneficiary road projects.

Also, all the road projects that have benefited from ABFA funding has been started prior to the discovery of oil and the creation of the ABFA under the petroleum revenue management act and virtually all of them are yet to be completed.

This he called on government to set priorities in the agriculture sector for which petroleum revenue would be utilized. This will ensure that the impact of such programmes can be seen by stakeholders in the agricultural sector.

He pointed out that total actual petroleum revenue received as at the end of the first half of the year was US$596,073,381, compared to the projected revenue of USUS$581,721,690 for the entire year 2013. This raises further questions about the determination of the benchamark revenue.

The ABFA inflows have been allocated to support projects in virtually all the sectors of the economy.
Indeed a critical scrutiny of the ABFA-funded projects shows that the ABFA has been used to fund projects in all the 12 areas.

This makes the ABFA being over stretched too thinly among too many projects rendering it less effectives and impactful.

“Other countries such as Botswana had used proceeds from diamonds to embark on massive infrastructural projects that present and future generations of that country could identify with and urged a similar practice in Ghana,” he said.