President John Mahama has instructed finance minister Seth Tekper to review government’s oil revenue projections for 2015.
According to Seth Tekper ‘ his Excellency has directed and we are doing an analysis which will go to cabinet and cabinet will take a decision on the impact on the crude oil prices and if necessary we will go to parliament…………..So if it requires that we make changes government will not hesitate and that is the directive from the president to me and my side and that is what we are working on’. he said.
The latest development follows the continuous fall of the price of oil on the world market. Global oil prices have collapsed by a hefty 60% since June,2014 hit by plentiful crude supplies and demand fears in the faltering world economy.
A barrel of crude oil is currently going for about 45 dollars a barrel.
Government’s revenue estimates prior to the slump in oil prices was pegged at 4.2 billion cedis or 3.1 percent of GDP for 2015 according to figures from the finance ministry.
Energy analyst with the Africa Centre for Energy Policy, John Peter Amewu earlier told Citi Business News development of Ghana’s infrastructure projects will suffer a heavy blow in the coming months as the price of crude on the world market continues to plunge.
The slump in oil prices has affected most economies round the world and has sent a shock wave through the global energy industry, sparking the cancellation of projects and job losses.
British oil giant BP for example, yesterday revealed it was shedding 200 staff jobs and 100 contractors in its North Sea activities, while Africa-focussed British energy explorer Tullow Oil took a huge $2.3bn write down on its assets, partly due to tumbling oil prices, and slashed spending this year.
A report from the Natural Resource Governance Institution released early this year on the impact of the oil price slump on state owned oil company, the Ghana National Petroleum Corporation (GNPC) said, GNPC will lose 52million dollars in projected oil revenue allocation for 2015.
According to the analysis, if the price of brent crude oil was to trade at $70 per barrel throughout 2015, as opposed to the $99 per barrel benchmark price, actual petroleum revenue to government would fall short by 31 percent, or $430 million, compared to our own estimate at $99 per barrel.
As compared to budget figures, the shortfall is projected at 23 percent, or $281 million.
The calculations show that the Annual Budget Funding Amount will be protected under a $70 per barrel price scenario.
The shortfall in revenue would affect GNPC negatively, allowing it to withhold $52 million less in revenues (a 25 percent reduction).
The accumulation of revenues into the two petroleum funds would slow dramatically under the $70 scenario: meaning $24 million would accrue to the Ghana Heritage Fund in 2015 and $56 million would accrue to the Ghana Stabilization Fund.
In both cases this figure is 74 percent lower than what would be obtained in a $99 scenario.
Government has been missing its revenue targets from cocoa , gold and oil over a period now, following changes in the prices of those commodities on the world market.
Ghana’s economy has faced some significant economic challenges over the past two years.
The drop in the prices of these commodities have been named as one of the main reasons leading to the economic challenges.
But finance minister Seth Tekper says this time round government will ‘will not repeat the 2012 mistake, in 2012 it was estimated that we will export about 90,000 barrels of crude oil we ended up doing about 73,000 that accounted for some of the slippage we saw in the last three years. The bank of Ghana will also be providing an update when they meet at the MPC and we will also do same.’ He said
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