The Public Interest and Accountability Committee (PIAC) has noted with concern the manner in which the Petroleum Revenue Management has been interpreted to justify transfers of money from the Ghana Stabilization Fund.
The Committee is therefore urging government to apply the rules and go by the procedures established by law to gain access to the fund through the people’s representatives in Parliament.
A statement signed by Yaw Owusu Addo, Chairman, Communications Sub-Committee of the Committee explained that the Ghana Stabilisation Fund is intended to primarily be a back-up support for the annual budget in times of petroleum revenue shortfalls.
It said media reports in May 2014, which were subsequently confirmed by the Minister of Finance in his statement to Parliament during the presentation of the supplementary budget, indicated that “The Ghana Stabilisation Fund has been capped at $ 250 million.
This is consistent with section 23(3) of the Petroleum Revenue Management Act, 2011.
The statement said as at May 2014, an excess of $ 176 million had been realized.
“Out of this amount, $16 million (GH¢ 50 million) was lodged into the newly established Contingency Fund and the difference of $ 159 million is being used for debt repayment,” it said.
The statement said the Committee has subsequently investigated the matter and “wishes to state that even though Section 23(3) of the Petroleum Revenue Management Act, 2011 (Act 815) empowers the Minister to recommend for the approval of Parliament, a cap on the Ghana Stabilisation Fund, the wording of the Section suggests that the capping is supposed to be done prospectively and not retrospectively as has happened in this instance.”
It observed that at the time the cap was recommended, funds in the Ghana Stabilisation Fund had already exceeded the cap of $ 250 million.
The statement said the approval of Parliament ought to have been sought before any disbursement of the excess amount from the Ghana Stabilisation Fund.
It noted that approval of the Budget for the Ministry of Finance was for the specific amounts that were estimated to be released to Ministries and Departments to carry out Government business for the year.
It said in the case of the Ghana Stabilisation Fund, Parliament was not informed about the amount that was expected to be in excess, therefore, specific approval was required before the amount could be moved out of the Ghana Stabilisation Fund, taking into account the provisions of Section 12 (5) of the Petroleum Revenue Management Act.
It said section 12 (5) of the Petroleum Revenue Management Act states that “transfer out of the Ghana Stabilisation Fund shall only be done for the purpose of alleviating shortfalls in actual petroleum revenue…’’.
Clearly, it said, the condition precedent prescribed in subsection 12 (5) did not exist to warrant the withdrawal, it said.
According to the statement, the Committee is of the opinion that the amount that should have been transferred from the Ghana Stabilisation Fund should have been limited to $ 107,457,183.71, which is the difference between the existing balance at the end of 2013, which was $ 319,034,153.16 and the amount of $ 426,491,336.87, accumulated at the time of the Minister’s instruction to the Bank of Ghana through the Controller and Accountant General’s Department.
The statement said consequently, it is the view of the Committee that the cap must be reviewed to the original $ 319,034,153.16, which was the amount existing in the Ghana Stabilisation Fund at the beginning of 2014 by restoring the amount of $ 69,034,153.16 from subsequent proceeds of liftings in the second half of 2014.
“The Public Interest and Accountability Committee reiterates its position, captured at page 24 of its 2013 Semi Annual Report that closer attention should be paid to the projection of the Benchmark Revenue leading to allocations into the ABFA, the Ghana Stabilisation Fund and the Ghana Heritage Fund,” it said.
It warned that any serious understatement of expected revenue leads to under allocation into the ABFA and subsequently more fund into the Ghana Stabilization Fund and Ghana Heritage Fund.
It said an overstatement of the Benchmark Revenue is equally undesirable as it would also result in the under-funding of the two Funds (Ghana Stabilization Fund and Ghana Heritage Fund).
The Public Interest and Accountability Committee (PIAC) is established under Section 51 of the Petroleum Revenue Management Act (Act 815) with the f objectives of monitoring and evaluating compliance with the Act by the Government and other relevant institutions in the management and use of petroleum revenues; providing a platform for public debate on spending prospects of petroleum revenues in line with development priorities, among others.