Ghana makes public proposal for use of oil funds

Ghana discovered oil in commercial quantity in 2007. The country has the largest oil field to be discovered in West Africa in the last 10 to 15 years – the Jubilee oil field.

Commercial production of oil is expected to begin in the last quarter of 2010.

There are ongoing discussions on how to prevent what is widely known as “the oil curse” which most African countries that have oil have suffered, such as deepening poverty, graft, mismanagement of the resources and social unrest, all as a result of the oil wealth.

Ghana in working at a suitable way of managing the oil wealth, has formulated a policy and the Ministry of Finance has made public a preliminary proposal on managing the country’s oil revenues.

The draft proposal, which is currently available on the ministry’s website will later be revised to incorporate views from ongoing nationwide public consultations, citizens survey and comments from the public.

The proposal suggests that a Ghana Petroleum Account at the central bank should be set up to receive all petroleum revenues due the state for subsequent transfers to the national budget.

Additionally a Ghana Petroleum Funds will be established. Prohibited use of the funds from the account has also been defined by the proposal. “The account shall not be used in any other way, nor shall it be used to provide credit to the central government or to state enterprises or private sector entities, or to any other person or entity. Any borrowing against the Ghana Petroleum Reserves Account or proven petroleum reserves is strictly prohibited” states the proposal.

Before the oil begins to flow, several interest groups are calling on government to expedite action on an oil revenue management legislation.  Recent calls have also concentrated on making public the contents of such legislation before it is passed into law.

By Emmanuel K. Dogbevi & Dode Seidu