House continues with debate on Oil Bill

PAGE 12, NOV 24, 2010
Story: Emmanuel Adu-Gyamerah
A FORMER Deputy Minister of Finance and Economic Planning, Professor George Yaw Gyan-Baffour, has advocated the use of the country’s oil revenue for investments that will ensure that when the oil wells dry up, a new industry can help maintain the level of development that will be sustainable.
Prof Gyan-Baffour made the suggestion when he contributed to the debate on the Petroleum Oil Management Bill currently going on in Parliament.
“We must use our oil money to support and develop our industrial base for the production of light industrial goods so that our economy will no longer be under the constant threat of shocks from nature, such as drought and shocks from commodity markets such as falling prices of cocoa and minerals,” he said, adding that it was in doing so that the “oil find will become a real blessing to the country”.
Prof Gyan-Baffour explained that it was in that light that he was not in agreement with using the oil revenue to support the budget, as stated in clauses 19 and 22 of the bill and which was confirmed by the Minister of Finance, Dr Kwabena Duffuor, when he presented the 2011 Budget.
The former deputy minister asserted that for effective utilisation, there was the need to focus on few sectors by providing for better education, better health care, better roads, better energy and better access to finance by the government and the private sector, all in support of the industrial transformation of the economy.
He agreed that the oil revenue should be kept in a separate account at the Bank of Ghana but urged that the account be used to create a separate fund outside the Consolidated Fund for the industrial transformation of the economy and not to be used for general budget support.
On the establishment of the Ghana Heritage Fund, Prof Gyan-Baffour stated that even though the idea was brilliant, it was premature, explaining that at this time when the country’s roads were bad, the power system in danger, among other social problems, the country should postpone the establishment of the fund for at least five years.
The Member of Parliament (MP) for Nabdam and Chairman of the Mines and Energy Committee of Parliament, Mr Moses Asaga, said the bill had come at the right time.
He said the government should be commended, since some countries which were seen as having best practices in the management of their oil revenue, such as Norway, did not put in place such a law at the initial stages of their oil production.
He said it was good for the Heritage Fund and the Stabilisation Fund to be endorsed as part of the bill.
Mr Asaga advocated the use of oil revenue as collateral, as against borrowing against the country’s reserves.
He said in the short term, the government wanted Ghana to move to the upper middle-income bracket by using resources accruing from the oil find.
“We want to make Ghana the Singapore of West Africa,” he said, and made a strong case by citing Brazil which used its oil to mobilise as much as $67 billion from the capital market for its development programmes.
For his part, the Second Deputy Speaker of Parliament and MP for Dome-Kwabenya, Professor Mike Oquaye, called for the consideration of the request of the chiefs of the Western Region for the allocation of 10 per cent of the oil revenue into a fund for the development of the region.
“The Western Region deserves a better treat,” he said, and advocated that wherever oil was found, some percentage of the revenue should be used for the development of that area.