Story by Hanna Elinam Atatsi /www.cmonline.com.gh
Prof. John Gartchie Gatsi, an economist has revealed that government’s decision to exclude gas revenues from its projected petroleum revenues demands a room for further interrogation.
According to him, the proposal made by the Minister of Finance in the 2019 budget to take off gas revenues to the tune of $181.80 million was in contradiction to what constituted the petroleum revenues in the law and for that matter, their reasons for such a decision was not lucid.
“That decision should be interrogated further because when you read the Petroleum Revenue Management Act (PRMA), it is very clear what constitutes petroleum revenues so we cannot try to tamper with the definition of petroleum revenue. What the Minister is doing now will mean that gas revenue does not form part of petroleum revenues and the reasons surrounding that were not very clear,” he said in a post- budget interview on November 23,2018.
He added that the minister’s attempt to even explain that the proposal should not be misconstructed to mean that the ministry will not be pursuing the gas bills, as required by the PRMA, clearly showed it was a controversial decision.
“He knew it was a controversial decision. I think that until clearer, more transparent explanation is given to that, we need to maintain the status quo in terms of what constitutes petroleum revenue which includes revenues from gas, “Prof. Gasti, who is also the head of Department of Finance at the school of Business, University of Cape Coast, said.
The Africa centre for Energy Policy (ACEP) had also earlier described the proposal to waive gas revenues as ‘interesting,” explaining that the reality was that even before the official application for waiver, the Volta River Authority (VRA) had not been paying for gas consumption.
A statement issued by the ACEP said after years of non-payment, coupled with the effort to remove distribution challenges through the implementation of the concession arrangement under the Millennium Challenge Compact II, the government was rather willing to entrench the practice of denying the PETROLEUM holding Fund (PHF) revenue from gas.
“Since 2014, the government’s effort to effort to provide a sound market in the power sector through its utilities has been abysmal; the government debt settlement and Electricity Company of Ghana(ECG) power purchase settlements continue to support Independent Power Producers (IPPS) over VRA, the latter being the primary consumer of domestic gas”. The statement added that “the gas revenue is part of the receivables of the PHF. Therefore, the VRA must be made to pay for the gas.
The debt of the VRA is supposed to be part of the energy sector debts to be recovered under the Energy Sector Debt Recovery Levy Act (ESLA). Thus far, no amount from the ESLA bonds has been paid into the Petroleum Holding Fund (PHF) in respect of gas revenues.
The Minister of Finance, Mr. Ken Ofori- Atta in the 2019 budget said the ministry was proposing to parliament to allow it to exclude gas revenues to the tune of US $181.80 million from the projected petroleum revenues for 2019, as it devises ways of getting the VRA to pay for the gas supplied it by Ghana Gas.