The Petroleum Revenue Management Bill, originally proposed in early 2010, was eventually passed by the Ghanaian parliament in March 2011. This article was written during the proposal stage of the bill and sets out to detail the features of the then-proposed legislation, to assess the chosen approach to revenue management and to make clear what benefits the bill entails for good governance and accountability.
The author firstly gives a brief outline of the details of Ghana’s major oil find. Originally discovered in July 2007, yearly oil revenue streams are estimated to reach an ultimate high of $1 billion. The author proceeds to explain the rationale for introducing a new petroleum revenue management law. He argues that Ghana’s legislative infrastructure was previously ill-equipped to prevent inefficient and corrupt handling of petroleum revenues, a problem which has plagued other oil-producing countries such as Nigeria. An important lesson for Ghana to learn, the author argues, is that oil revenues should not be treated in the same manner as conventional tax revenues, since the oil resource is non-renewable. The author then details the key features of the bill.
The bill prescribes the establishment of a Petroleum Account into which all streams of revenue from oil production are to be paid into. The author lauds the bill’s commitment to transparency and adequate reporting and auditing of revenue management. Furthermore, he welcomes the cap on budget funding which is not permitted to exceed 70% of total revenue receipts as well as the commitment to safeguarding at least 30% of petroleum revenues for future generations (through the Heritage Fund) and for expenditure smoothing (through the Stabilisation Fund). In light of the subsequent amendment to clause 5 which has allowed the government to use oil as collateral for loan facilities, the author’s comments on clause 5 are particularly interesting. The author argues that such an amendment would be ill-advised given the depletable nature of the oil resource.