An empirical review of petroleum revenue management and distribution after a decade of oil production and export in Ghana

Abstract

The discovery of commercial quantities of hydrocarbons in Ghana in 2007 expedited the enactment of various carefully thought-out legal and regulatory frameworks implemented specifically to facilitate the collection and distribution of petroleum revenues. The Petroleum Revenue Management Act, 2011 (Act 815) amended by Act 893, 2015 was enacted to ensure efficient collection and allocation of revenues in a sustainable and transparent manner. This study examines petroleum revenue collection and allocation in commercial production from 2011 to 2020. Content analysis was applied to secondary data sourced from notable institutions such as the Public Interest and Accountability Committee, Bank of Ghana and Ministry of Finance. The information retrieved was then analysed. The study revealed that, within the 10-year period, a total of US$6.55 billion has come to the state, out of which US$6.52 billion has been allocated based on the Petroleum Revenue Management Act (PRMA). The Carried and Participating Interest has been the most significant source of revenue to the state; contributing 58.1% followed by Royalty Payments (25%) and Corporate Income Tax (16.5%). The study concludes that petroleum revenue collection and allocation has largely been done with reference to the PRMA. However, ministerial discretion and lack of a clear-cut definition of the priority areas are sources of abuse to oil revenue management. The study, thus, calls for reforms in the management and use of oil revenues to help ensure long-run benefit and sustainability.