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PIAC, Gov’t in row over PRMA

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Adnan Adams Mohammed
The Petroleum Revenue Management Act (PRMA) 2011 (Act 815), promulgated to guide every government on how to spend its oil and gas revenue, is being breached by the current government according to the Public Interest and Accountability Committee (PIAC).
PIAC has raised a red flag on the government’s expenditure pattern of the petroleum revenue, alleging that it is in contravention with Petroleum Revenue Management Act.
According to the oversight committee, the government has spent more of the petroleum revenue on goods and services, instead of capital expenditure, as required by the law, but the Minister of Information, Dr Mustapha Abdul-Hamid, has denied this assertion.

In its 2017 Annual Report presented at a public forum in Takoradi last week, PIAC said, only 37 percent of the utilised Annual Budget Funding Amount (ABFA) was directed to capital expenditure, rather than recurrent expenditure on which the bulk of the monies received have been spent while other wrongful payments and activities were carried out, which was against the law.

But, government in a Press Statement said, PIAC’s argument on the ABFA is not aligned with the provisions of the law.

Dr Abdul-Hamid said the total amount utilised was GH¢332.29 million, well within the budget ceiling of GH¢796.32 million, representing about 41.7 percent utilisation. This, he said, was well within the allocation for the year.

He further explained that “what remains is a balance of GH¢464.02 million for 2017, which is the available balance”.

“From the foregoing, it is clear that PIAC’s interpretation of Section 41(4) of the PRMA relates to the amount spent, rather than the amount received. The law does not refer to expenditure but the ABFA in totality,” the minister said.

However, the Chairman of PIAC, Dr Steven Manteaw said, “You can dispute the figures as provided, but there is no way government can justify that it has not breached the law.”

Dr. Manteaw argued that, per the data received from the Ministry of Finance, government’s heavy expenditure on recurrent expenditure is critically inconsistent with the provisions of the Act (PRMA) 2011 (Act 815).

“If only they agree that per the provisions of the law, the government is required to spend a minimum of the ABFA on public investment expenditure, then when you look at the expenditure for 2017, which hovers around $300 million out of which US$202 million was spent on School fees and Feeding alone. This represents more than 60% of the total amount just on recurrent expenditure” he explained.

Meanwhile, Section 21(4) of the PRMA states that “For any financial year a minimum of 70% of the ABFA shall be used for public investment expenditures consistent with the long term National Development Plan”

PIAC contends that in 2017, the expenditure, as reported by the Ministry of Finance, did not conform to the requirement to spend at least 70 per cent of the ABFA on capital expenditure.

“What has happened is a complete disregard for the law and the Ministry of Finance must, therefore, comply with the provisions of Section 21(4) of Act 815 in respect of public investment expenditure,” he said.

Apparently, the minister stated that, the government had not breached the Petroleum Revenue Management Act, 2011 (Act 815), as amended.

Explaining further, he said Section 21(4) of the PRMA states that “for any financial year, a minimum of 70 per cent of the ABFA shall be used for public investment expenditures consistent with the long-term national development plan”.

That, he said, was the basis of PIAC’s argument, which the government noted was not aligned with the provisions of the law.

According to him, the 70 percent referred to in the law was not 70 percent of the amount spent but of the amount received as ABFA.

“Thus PIAC’s assertion that 63 per cent of the ABFA was spent on goods and services is flawed. Its analysis is based on the amount that was spent, rather than the amount received,” Dr Abdul-Hamid explained.

He said Parliament approved the ABFA for every year.

In 2017, for instance, it approved GH¢796.32 million in petroleum funds to be utilised as ABFA, of which 30 per cent was to be utilised for goods and services and 70 per cent for capital expenditure.

The minister explained further that “the Ministry of Finance received the equivalent of GH¢733.21 million, about GH¢63.11 million lower than what was provided for in the budget, due to exchange rate losses”.

He said Parliament approved GH¢211.72 million to be utilised for physical infrastructure and service delivery in education, adding: “Of this amount, GH¢202.40 million or 96 per cent of the 2017 budget allocation was spent”.

Citing allocations in percentage terms for areas such as agriculture, physical infrastructure and service delivery in education, physical infrastructure and service delivery in health, road, rail and other critical infrastructure development and PIAC, the minister said “all other expenditure items, except the allocation to PIAC (which was 71 per cent), were below 35 per cent utilisation”.

“None of the allocations approved by Parliament was breached,” he stressed.

Dr Abdul-Hamid said the explanations provided from the foregoing clearly show that the government did not breach the PRMA, as was being alleged by PIAC.

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