PRMA Amendment: stakeholders want restrictions on Heritage Fund peg at 25years
Adnan Adams Mohammed
Stakeholders involved in the consultative process on the proposed amendments to Ghana’s Petroleum Revenue Management Act, 2015 (Act 893) have unanimously agreed to a proposal that, restrictions on transfers from Heritage Fund (HF) should be extended to 25 years from the current 15 years.
The proposal which was made by the Investment Advisory Committee justified that, a longer period of lockup of funds in the Ghana Petroleum Fund (GPF) is advisable and also in line with potential tenors of long term projects and global best practices. The stakeholders also want the definition of Section 10.4 of ACT 893 extended to cover all earnings, including equity dividends, capital gains and ownership interests.
There is indication that, government will push to have the amendments passed by the end of 2020. Some of the stakeholders involved in the consultative process were: Ministry of Finance, Bank of Ghana, Investment Advisory Committee, Public Interest and Accountability Committee, Ghana Revenue Authority, Petroleum Commission of Ghana, Audit Service Ghana and some CSOs.
“GPF is envisaged to also allow investments beyond fixed income” Dr Steve Manteaw, former Chairman of PIAC said during a virtual media and CSOs training session organized by NRGI in collaboration with PIAC on the proposed amendments.
The training session was to achieve overriding objective of enhancing CSOs and the media skill on the reform process, particularly proposals made by CSOs, to be able to keep track of every stage of the amendment/review process and influence the outcome.
The Petroleum Revenue Management Act, 2011 (Act 815) as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893) (“PRMA”) was enacted to provide a strong governance framework for the collection, allocation, and optimum management of petroleum revenues in Ghana. The underlying philosophy is to ensure a responsible, transparent, accountable, and sustainable management of petroleum revenues to the benefit of the citizens of Ghana, in accordance with Article 36 of the Constitution. Specifically, the PRMA provides for the establishment of the Petroleum Holding Fund (PHF) and Ghana Petroleum Funds (GPFs).
Additionally, it provides a framework for the allocation of funds to the GPFs, Annual Budget Funding Amount (ABFA), a National Oil Company (NOC), and the Ghana Infrastructure Investment Fund (GIIF). Other provisions include a mechanism to manage oil price volatilities, and the establishment, composition, and funding of the Public Interest and Accountability Committee (PIAC) and Investment Advisory Committee (IAC).
Since 2015, petroleum revenue management processes in Ghana have largely been effective and well streamlined under the PRMA. This has culminated into increased transparency, accountability, and use of revenues for development.
However, there exist broad implementation bottlenecks and compliance challenges with the PRMA. Among others, specific challenges relate to revenue collection relative to non-payment, deferred payment, and wrongful lodgment of revenues.
The rest are political interference in the management and utilisation of the GPFs; recurring non-compliance in the reported expenditure of the Ministry of Finance (MoF) to the PRMA requirement to spend at least 70 percent of the ABFA on Public Investment Expenditure (PIE); and the inconsistent allocation of petroleum revenue to GIIF, contrary to the Law. These militate against good revenue management efforts, and therefore require remedial action.
To this end, the MoF, in 2019, started a consultative process with sector stakeholders to trigger reform of the petroleum revenue management framework to address the identified challenges and respond to the current context. Two consultative fora which drew representation from CSOs and key government institutions were held in October 2019 and February 2020. These were to ensure holistic review of the PRMA and to solicit stakeholders’ inputs on specific provisions in the PRMA that may require amendment, and to discuss same for consideration.
At the end of the consultation process, a compendium of proposed amendments to the PRMA was developed from the various stakeholder inputs by a Technical Committee constituted by relevant sector stakeholders, and presented to the MoF for Government’s study and consideration.