By: By: Valentine N. Agbenoworsi/www.africanakua.com/Ghana
Ghana’s fortunes in terms of revenue continue to increase, likewise its expenditure too, thanks to contributions from its extractives sector.
Between 2010 and 2017, the mining and petroleum sectors in Ghana each contributed about GH¢10 billion to the nation’s revenue purse. While it is impossible to determine how revenues from the century-old mining sector have been used, it is possible to track how much was earned, spent and invested in the petroleum sector.
The use of such revenues, however, is of critical importance to the wellbeing of the citizenry since it affects their social, economic and political conditions. This therefore requires strong institutions to oversee this process in order to safeguard this primary public interest. This underpins the establishment of the Public Interest and Accountability Committee (PIAC).
In its new report, the Africa Centre for Energy Policy (ACEP) evaluates the mandate, performance & accountability practices of PIAC in the management of petroleum revenue in Ghana.
Mandate of PIAC
Following continuous civil society demand for an independent body to oversee the management of revenues from the extractive sector as a result of public dissatisfaction with existing state institution’s responsible for same, PIAC was established by section 51 of the Petroleum Revenue Management (Amendment) Act, 2011 (Act 815) by the then government in 2011. Its main role in simple terms is to promote transparency and accountability in the management and use of petroleum revenues in Ghana.
PIAC performs its functions through a thirteen-member composition (section 54(1) of the PRMA 2015, Act 893 as amended) drawn from nominated representatives of non-governmental constituent groups, who are then appointed and sworn-in by the Minister of Finance, in the same manner as government appointees.
The Committee is financed by the State through the national budget prepared by the Ministry of Finance as stated in section 57(1) of the Petroleum Revenue Management (Amendment) Act, 2011 (Act 815), with the specific source of finance to the Committee’s budget being the Annual Budget Funding Amount (ABFA) as outlined in section 57(3) of the PRMA (as amended).
PIAC is audited by the Ghana Audit Service, and provides quarterly reports of its activities and programmes to the Ministry of Finance in compliance with section 30(3) of the Public Financial Management Act, 2006 (Act 921).
Stakeholders interviewed in the report, praised PIAC for certain improvements.
One of which is the fact that PIAC has improved upon its sense of independence. The certainty of funding from ABFA, and non-reliance on the Ministry of Finance for budgetary approval has emboldened PIAC to achieve its objectives. “PIAC has become more confident and more aggressive about what they look out for”, a donor stated.
Another major improvement is that, PIAC has expanded the scope of its reach. According to stakeholders, ABFA has created room for PIAC to do other things on its own compared to work plans determined by donor funds. PIAC can now plan more activities, monitor and engage the public. “The Committee has managed to ensure that at least, a cross-section of the Ghanaian citizens is well aware of the management of petroleum revenues. PIAC has improved stakeholder engagement and the verification of oil and gas infrastructure projects by visiting projects sites and communities”, Government observed.
Critical interpretation of the data analyzed reveals that PIAC’s performance in relation to its functions have improved over time, especially following the amendment of the PRMA to secure funding from the ABFA for its operations.
In spite of these improvements, there remain some challenges the Committee must work on.
The challenges facing PIAC can be categorized into both internal and external challenges.
Internally, PIAC has not fared too well. It was involved in some procurement infractions in 2016, which has since been rectified.
Again, its quarterly reports are always released late. The Committee has also not been very proactive in engaging the public when it comes to its functions. It has as well, not been furnishing the public with full details of its finances.
Additionally, PIAC is in a conflict of interest position where it plays oversight of the very funds it benefits from. The risk that PIAC might not perform this function with equal measure as it does with other institutions is high.
External-wise, funds to PIAC allocated for its yearly programmes always delay in being released by the Ministry of Finance. This prevents the Committee from carrying out most of its activities within the year.
PIAC further suffers from technical competence issues owing to the short tenure of its members. By the time members master their roles, they will be nearing the end of their two or three-year tenure (section 55(1) of PRMA, 2011).
The Committee also lacks the prosecutorial powers to enforce its recommendations. This often undermines its functions and eventual output.
In order to improve upon its roles, the report put forth the following recommendations:
One of these is that PIAC must have an internal auditor to control and mitigate the risk of financial infractions. The Accountability Committee must also be intentional about communicating its financial resources management practices and financial reports with the general public annually, through publication on its website and in the dailies. This will boost public trust in, and support for PIAC.
Two, the Committee must be more accountable to its constituent groups, and by extension, the people of Ghana. “They [PIAC] are accountable to Parliament who represents the people, but the danger is that the ordinary people are left out”, one donor remarked. Accountability of PIAC members to constituent groups must be provided for in the regulation to bridge existing communication gap between PIAC and its constituent groups. Constituent level engagements must be done at least once each year. PIAC must also prioritize citizens’ engagement in its planned programme and activities for every year and must leverage on technology and the media to have wider reach and coverage.
On the issue of conflicting roles between PIAC and the PIAC secretariat on technical and administrative matters, the regulations to the PRMA should clearly detail out the functions of the Secretariat and areas of shared responsibility with PIAC. Internal rules of procedure must be made to align with the provisions in the regulations to avoid ambiguities.
On the enforcement of its recommendations, an option available to PIAC is that it may, for public interest reasons, appear before a court under Article 2(1) (a) and (b) of the 1992 Constitution to enforce its recommendations on petroleum revenue management and in compliance with the PRMA. This option however, comes with administrative and legal costs of which PIAC must be prepared to bear and cater for same through its annual budget.
The committee must also consult extensively to boost the rigor of its analysis.
According to the report, PIAC ought to strategize properly and prioritize its activities to make its needs suit its resources. That is, notwithstanding the late disbursement of funds (usually done during the second half of the year), PIAC could plan and execute those high-impact activities that require huge expenditures in the second half of the year in order to fully and effectively utilize funds.
The report further recommends that specific timelines for ABFA disbursement in the PRMA regulations (which is still in progress) be quickened in order to solve the challenge of late disbursements by the Ministry of Finance so as to comply with the budget allocations and release funds on time to the Committee. The report further demands that the regulations compel the Minister of Finance to ensure that the Bank of Ghana pays amounts due PIAC from the ABFA no later than three (3) working days after receipt of petroleum revenues into the Petroleum Holding Fund (PHF).
The Committee must also be shielded from the claw back provisions of the PFM Act to enable it retain its unutilized funds beyond January of the ensuing year. However, this should be done with some restraints.
On a whole, it is evident that PIAC’s efforts can be undermined by partisan politics due to the nature of appointment of its members, sources of financing for its annual programmes, and the Minister of Finance’s discretion to determine the allowances paid to members of the Accountability Committee.
However, because PIAC remains such a critical quasi-state institution with a key role in the nation’s quest to ensure transparency and accountability in ensuring the public’s interest in the use of petroleum revenue, all measures must be put in place to ensure it becomes efficient, responsive, and true to its functions. This demands the efforts of all of us – civil society groups, think tanks, governments, and individual citizens – to help the Committee succeed in discharging its much needed mandate, effectively and independently.