Hohoe, March 20, GNA – Africa Centre for Energy Policy (ACEP), an energy think-tank, has described the government’s oil revenue projections in the 2013 budget statement as understated.
In a statement signed by Mr Mohammed Amin Adam, Executive Director and made available to the GNA, it said projections would be botched by serious challenges but achievable.
Government projected that receipts from oil would be $581.7 million based on projected oil production of 83,341 barrels per day with crude oil price pegged at $94.36 per barrel.
An estimated crude oil volume of about six million barrels would be lifted by the government.
It said the government’s projected production volume per day was conservative, in that Jubilee Field’s peak production of 120,000 bpd had been re-scheduled to the middle of 2013 with the year’s production starting at about 111,000 bpd.
It said there are wide variations between the government’s projection and that of Kosmos Energy, which put the expected average production between 105,000 and 115,000 bpd in 2013, with the midpoint of the range representing an increase of greater than 50 percent from the 2012 average.
“We also estimate that crude oil price for the year will average a little above US$100 per barrel on account of the estimated global economic growth at 3.5% for the year (World Economic Outlook) compared with 3.2% in 2012,” it stated.
The statement said non-realization of corporate taxes from petroleum companies in 2011 and 2012 were largely responsible for lower than expected petroleum revenues, culminating into government receiving only about US$40.2 million as corporate taxes for 2012, lower than the target of US$239 million.
It said the use of production decline from Jubilee Field as the cause of the losses as pointed out in the budget statement is unacceptable.
The decline in production is more than compensated for by higher than expected crude oil prices (a $19 gain per barrel of crude oil whilst Government also exceeded its target for carried and participating interests.
ACEP said major issues in the 2013 Budget Statement that needed to be addressed to protect the sanctity and spirit of the Petroleum Revenue Management Act 2011 (Act 815) include failure of government to provide information on the estimates of gas production and gas prices, a development which raises uncertainties about the revenue potential of natural gas.
It found that the projections of gas revenues of about US$9 million are quite vague and could conceal important determinants of the Benchmark Revenue.
It noted government’s plan to use part of the Annual Budget Funding Amount (ABFA) to set up an Infrastructure Fund to facilitate Ghana’s access to the capital market is alien to the Petroleum Revenue Management Act.
“The only Funds allowed under the law are the Petroleum Holding Fund, the Stabilization Fund and the Heritage Fund. Although the setting up of an Infrastructure Fund is laudable, it requires an amendment to Act 815,” the statement said.
The statement noticed inconsistency with the law regarding the allocation of the ABFA for the expenditure and amortization of oil and gas infrastructure loans as one of the four priority areas selected by the Minister in accordance with Section 21(5).
ACEP view is that the financing of oil and gas infrastructure is adequately provided for in Section 7 and 3(b) of Act 815.
This includes allocation to finance the equity cost of development and production of the National Oil Company and a further allocation of not more than 55% of the net carried and participating interests for other investments.
“Thus, the ABFA can only be applied to infrastructure financing outlined in Section 21(3) of Act 815, which does not include oil and gas infrastructure.”
It queried the inconsistency in the definition of the ABFA describing it as worrisome.