The former Deputy Minister of Energy and the Member of Parliament (MP) for Adansi Asokwa in the Ashanti Region, Mr. K.T. Hammond, has called on the government to explain to the people of Ghana why the $54.1 million paid into the Stabilization Fund, as a percentage of the total receipt from the petroleum revenue in 2011, and invested for a period of one year, yielded a paltry sum of $4,679 as interest.
He similarly wants to know why $14 million invested from the Heritage Fund, in the interest of generations yet unborn, within the same period, also yielded just $1,000 as interest.
Describing as scandalous the disclosure which was contained in the 2012 Annual Report on Petroleum Funds submitted to Parliament recently by the Finance Minister, Mr. Seth Terkper, KT Hammond argued that the figure presented as interests that accrued on the over $68 million investment was laughable, and demanded that a full probe be conducted to ascertain why those ridiculous figures accrued as interests.
When contacted, Seth Terkper explained that the government had been mandated by the Petroleum Revenue Management Act (PRMA) to invest monies accruing to both the Stabilization and Heritage Funds prudently, and that accounted for the low returns on the investment.
According to him, the framers of the law did not want monies paid into the above funds to be lost, hence the strict directive.
According to him, for any business to succeed, the promoters have to sometimes take risks by going into speculative investments. He noted that though speculative investment in most of the cases attracts high returns, it could also result in the loss of the money invested, and this is what the law sought to avoid.
He noted that if the $54.1 million and $14 million, from the Stabilization and the Heritage Funds respectively, had been invested in speculative portfolios, it would have attracted more interest, but the risk involved forced the government to void such investments.
But, Mr. K.T. Hammond, who was speaking in an interview with The Chronicle , said apart from the above issue he had raised, he also had a problem with the way and manner percentages of petroleum revenues were paid into both the Heritage and the Stabilization Funds.
He noted that in 2011, when the country earned $444 million from oil as revenue, $54 million was paid into the Stabilization Fund, whilst that of the Heritage Fund attracted $14 million. He regretted that in 2012, when the total revenue from oil rose to $ 541 million, which was an increase of $97 million, only $16.8 was paid into the Stabilization Fund. That of the Heritage Fund also attracted $7.2 million.
The vociferous MP also made reference to the 2012 annual report on Petroleum Funds, and alleged that a whopping sum of GH¢111,959,738 was splurged on capacity building, when as low as GH¢750,000 was spent on the same programme the previous year.
According to the MP, he had no problem if scholarships were given to Ghanaians to study petroleum-related courses abroad, and though he had problems with the mode of selection, the figure purported to have been spent on this was too astronomical.
‘If what is contained in the 2012 Annual Report on Petroleum Funds is anything to go by, then I am afraid the oil find may not be the blessing we have prayed for,’ he said.
Still on the petroleum funds, K.T. Hammond also demanded to know the breakdown of the Ghana National Petroleum Corporation (GNPC) allocation, which is always more than half of the total receipts of what the country receives.
To him, there seems to be a duplication of payments, and that a more details would set Ghanaians at ease. He did not understand, for instance, why the GNPC should be sponsoring the senior national team, the Black Stars, when the Ministry of Finance was already taking care of their expenditures on behalf of the state.
The Finance Minister admitted during the telephone interview with The Chronicle that payments to the both the Heritage and Stabilization funds had dropped. He, however, said he explained the drop in the budget statement he read in Parliament.
According to Mr. Terkper, he did indicate in the budget that oil revenues received in 2012 were allocated to the various allowable sources, in accordance with the Petroleum Revenue Management Act (PRMA).
He stated: ‘Of the 2012 petroleum receipts of US$541.62 million (GH¢979.32 million), an amount of US$230.95 million (GH¢416.89 million) was transferred to GNPC, comprising Equity Financing Cost of US$124.63 million (GH¢224.21 million), and GNPC’s 40 percent share of net Carried and Participating Interest of US$106.32 million (GH¢192.68 million), in line with Section 7 of the PRMA.’
‘ The remaining amount of US$310.67 million (GH¢562.43 million), representing the Benchmark Revenue, was distributed to the Annual Budget Funding Amount ( ABFA ) and the Ghana Petroleum Funds (GPFs), in line with sections 11, 18, 19 and 23 of the PRMA,’ he noted.
According to Terkper, he did also indicate that the allocation to ABFA in 2012 showed that a total amount of US$286.55 million (GH¢516.83 million) was allocated to the ABFA, in accordance with the PRMA, against a projected ABFA of US$383.52 million (GH¢614.55million) for the year, resulting in a shortfall of US$96.96 million (GH¢97.71 million).
The Finance Minister explained that the main reasons for the shortfall in the 2012 ABFA allocation were the shortfall in oil production targets, as well as the non-realisation of corporate tax in 2012.
Shifting his focus to the power sector, the New Patriotic Party (NPP) MP told The Chronicle that he finds it outrageous and immoral that at the time like this, when companies are shutting down, household equipment breaking down, because of inadequate power supply, the Volta River Authority (VRA) should be telling Ghanaians to still tighten their belts and pay more in tariffs. ‘The VRA should be going to their bosses to pay up, if, as they claim, the various government departments owe them substantial sums of money,’ he said.
He accused the NDC government of failing to add a single unit of generation to the country’s installed capacity, yet they shouted on roof tops when the level of water in the Akosombo Dam went down during President Kufuor’s era, which affected power supply.
Today, the Akosombo Dam is full, and yet the country has been plunged into total darkness, he added. He regretted that in the face of these difficulties, the government failed to mention any concrete measures in the budget to address the power crisis.
‘When one would have thought that all urgent measures to bring the situation under control would be implemented, two plants, capable of generating about 120 megawatts of power, sit idle at Tema. The 80 megawatts mines reservoir plant, the TTP 2, sit there generating nothing, because the VRA claims it does not have money to buy diesel,’ he told The Chronicle .
Meanwhile, the Chief Executive Officer of the Volta River Authority (VRA), Mr. Kweku Awortwi, has indicated in a documentary being aired on Ghana Television that his outfit had the men who can manage the sector, but the democracy being practised in the country was thwarting their efforts.
He noted that the constant change of government, and the concomitant change in energy polices, is not helping their efforts.
He noted that Malaysia and Singapore were able to transform from a third world country to that of first, because of the long stay of their governments, which allowed them to see through their policies and programmes, but that was not the case in Ghana.
He noted that investment in the power sector would not take less than four years to complete, and was very capital intensive, yet the resources were not there to tackle them.
According to him, the various government departments and agencies owe the VRA over $400 million, and the figure is projected to go up this year. He said, buying crude to fire the thermal plants was very expensive, but the tariffs they received at the end of the day were nothing to write home about.