Ghanaian Migrants Information Services - Ghana pledges new approach to oil revenues

Ghana’s government will account for “every drop of oil and every cubic feet of gas” when it becomes Africa’s newest energy producer next year, John Evans Atta Mills, the president, has pledged.

Speaking in an interview with the Financial Times in Accra, Mr Mills said the country was determined to avoid pitfalls encountered by other oil producers. Opaque accounting in other African countries has fostered graft and the inflow of revenues has driven up exchange rates and distorted economies, giving oil a bad name across the continent.

Ghana’s fortunes would be furthered by “fiscal prudence, by encouraging productive investment and by hard work”, he said, not by “pinning all its hopes on oil”.

Mr Mills has been obliged to call on foreign donors, who have long regarded Ghana as a model African client, to help plug a record fiscal deficit exacerbated by bills left unpaid by the previous government of John Kufuor. Many Ghanaians are anxious about the impact oil will have on governance.

“We cannot afford to repeat the mistakes that other countries have unfortunately made. We must make sure oil and gas becomes a blessing,” said the former law professor who scraped through tense elections a year ago on an anti-corruption platform. “We must get competent people to manage the resources, to account for the resources and to use them to build a stronger economy and invest in our people.”

Analysts calculate that the Jubilee field, discovered off Ghana’s coast in 2007 should generate about $1.2bn on average over a twenty year life span. It is on schedule to begin production of 120,000bd of crude in the second half of next year, according to Nana Asafo-Adjaye, head of the state oil company.

Ministers have been studying model oil regimes in Norway, East Timor and Trinidad and Tobago. A draft revenue management bill would divide income between a stabilisation fund, to smooth the economic cycle, and a heritage fund to be spent when production starts to decline. The remainder would help finance the budget.

Mr Mills’ government has rattled some investors by scrutinizing international power, telecoms, and oil contracts signed by the previous government. He said it was his responsibility to “shine light” on these and insisted that every investor would be treated fairly and according to Ghanaian law.

“At the end of the day I will have to account to the people of Ghana. If what I have taken over is not what it appeared then they should also know,” he said.

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Source: FT