Lack Of Accountability Among Reporting Agencies In Oil Revenues
The Africa Centre for Energy Policy (ACEP) has organized a forum bringing together the reporting agencies and citizens to interact among themselves for the reporting agencies to report the data they have received and published and for citizens to ask discerning questions on the data for answers.
The Executive Director of ACEP, Dr. Mohammed Amin Adam has said “we think that merely publishing the reports and providing transparency doesn’t satisfy the aspirations of citizens because transparency is not an end in itself, transparency is a needs to accountability and so if you are not getting the accountability which is the other side of the equation, therefore the value of transparency is challenged.”
In an interview with the Punch Newspaper, Dr. Amin said the reports usually don’t provide the answers, it is when an open interaction exist between the reporting agencies and the issues bordering citizens that provides the answers.
The multi-stakeholder conference on accountability in the petroleum revenue management Act 815 brought togehter representatives from the Bank of Ghana (BoG), Finance Ministry, Public Interest and Accountability Committee (PIAC) and Penplusbytes.
When Ghana discovered oil in the jubilee field in commercial quantity, Ghanaians were demanding transparency and accountability in the management of the oil revenues.
Government, to a large extent has complied with the transparency provisions in the law and other agencies that are responsible for reporting on petroleum revenues such as the Public Interest and Accountability Committee (PIAC) and Bank of Ghana (BOG).
But the situation we have today is the case of transparency without accountability uptil now the Auditor-General has not released a report, and that is where the accountability is missing.
Why Ghana Continue to experience petroleum shortages
“The major problem is with the exchange rate losses. There are two levels, thus one is captured in the pricing when the National Petroleum Authority (NPA) decides to convert the dollar denominated price of petroleum products based on the import parity into the local currency and ineffective management of the Micro-economy,” the Executive Director of ACEP, has said.
According to him, at any time there is a depreciation on the cedi, the NPA rates appreciates and therefore, it will have an effect on the ex-refinery price but because government usually prevents the NPA from passing on the effect of the depreciation to consumers which accumulates as debts.
He noted our failure, as a country to implement the pricing formula is what has caused the accumulated indebtedness as a result of which the Bulk Distribution Companies (BDCs) are complaining they lack money to pay their suppliersor banks and thereby establishing new Letters of Credit to import the products.
Secondly, Dr. Amin added if that is not addressed by pricing, and if government decided not to pass on the effect of the depreciation to the consumer, that effect will still be felt which is “buying products in dollars and they sell in cedis and they will pay their suppliers in dollars.”
He revealed that Bank of Ghana which have its own official rate do not normally have the dollar to sell to them (BDCs), and so they are compelled to go to the open marked where the rate is even higher than that of the Bank of Ghana rate inorder to pay their suppliers.
“This is why we need to be able to address the effect of the exchange rates at two levels, both levels depends on prudent Micro Economic management, or else we should fine other mechanisms to accommodate the effect of the exchange rate loses which depends on policy issue,” he stated.
In an interview with the Punch newspaper, Dr. Amin urged government must, as a policy to revamp the Tema Oil Refinery, “we have to revamp Tema Oil Refinery, we have to recapitalize TOR and make it more efficient so that we can reduce the import of petroleum products.”
According to him, the consumption and demand for petroleum products increases annually by 12% percent.
His worry was that Ghana has the policy to tackle the situation however, these policies are not implemented to the required standard.
“Once we are able to reduce the import of petroleum produccts, the exchange rate effect will be addressed largely but once we continue to import them, the BDCs will continue to require the dollar to be able to import,” he posited.
From what he said, it means that if these outstanding issues are not tackled and addressed, the effect will still be felt and therefore the BDCs and the consumers will continue to wallow in higher shortages and higher prices.
TOR is configured to run jubilee crude because jubilee crude was tested in TOR for the first time and the question most people have largely asked ‘is whether TOR is efficient.’
The ACEP boss said “we address efficiency by investing in efficiency, this is why some tink tanks have called on government to prioritize TOR, recapitalize TOR and expand TOR’s capacity.”
He stated Ghana needs a policy to refine our own crude oil so that our dependence on imports is reduced largely.
But if we cannot reduce the Micro Economic challenge of the exchange rate but we can we can reduce import, the demand for the dollar will go down.
The Hedging Policy introduced on September 1st, 2013 needs evaluation
According to him, government must come clear on the hedging policy, “are we hedging against exchange rate fluctuation or we are hedging against crude oil fluctuation?” he asked rhetorically.
His understanding of the government’s hedging policy is against crude oil price fluctuation which doesn’t solve the exchange rate problem because crude oil prices have been stable for sometime now and therefore the essence of that hedging needs to be evaluated.
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