Prioritise education in allocation of oil revenues, CSOs advise

Some Civil Society Organisations (CSOs) have asked the government to prioritise education in the allocation of oil revenues rather than seeking to use proceeds of the Heritage Fund to finance its landmark policy on education, the free Senior High School (SHS) policy.

They explained that the government could make education one of the four priority areas that receive annual allocations of oil revenues from the Annual Budget Funding Amount (ABFA).

In separate interviews, the CSOs argued that the intended move by government defeated the purpose of establishing the fund as oil was a finite resource and would not be available forever.

The Country Director of SEND Ghana, a non-governmental organisation, Mr George Osei-Bimpeh in an interview on February 16 said although they were in support of children having access to education, there were better avenues to fund the initiative than using the Heritage Fund.

“Already the law allows the Minister of Finance to prioritise four key sectors and so that flexibility is there for the government to prioritise education and with that, no one will have any issue,” he said.

He further argued that currently, the accumulated funds would not be enough to run the programme should government go ahead to do so.

“If it about financing education, the amount of money that is currently in it won’t be enough to finance one academic year so far as the free SHS was concerned. It is a good initiative but government has to look at other alternatives,” he said.

A Policy Analyst at the Integrated Social Development Centre (ISODEC), Mr Leonard Shang-Quartey in a separate interview on February 16 said the whole idea of creating the fund was to make provision for the future generation

“We cannot exploit and utilise the proceeds from the resources as we have now. We have to ensure that the portion that belongs to future generation are properly put in place for them, and that is the reason why we have the Heritage Fund. This is a fund we cannot just be running to anytime we feel a pinch as a country.

Fund status

The current arrangement under the Petroleum Revenue Management Act (PRMA) sets aside nine percent of the allocation to the Ghana Petroleum Funds as a heritage for future generations.

As of December 30, 2016, the Heritage Fund had accumulated US$276.96 million (including returns on investment). These accumulations are from 2011 to 2015.

CSPOG’s Position

The Civil Society Platform on Oil and Gas (CSPOG), a group that has been at the fore front of ensuring the efficient management of the country’s hydrocarbon resources since the discovery of Jubilee, has also urged government to rescind its intended decision to touch the fund.

The group’s Chairman, Dr Steve Manteaw said it was important for the government to recognise the fact that the establishment of the Heritage Fund moved Ghana away from the reckless practice of spending the entirety of the current year’s natural resource revenue in the next year’s budget, often paying for recurrent expenditure items.

He explained that while the CSPOG did not discount the importance of education in nation-building and is in fact in full support of the free SHS policy, the group believed this could be done without encumbering the small fund that is being preserved for future generation.

“CSPOG wishes to also point out that at the current production levels and world market prices, the Heritage Fund is not likely to yield more than US$25 million a year and so once the accumulated fund is exhausted in the first year of the free SHS programme, which will certainly be the case, the annual Heritage streams will be woefully in adequate in meeting the free SHS expenditure, raising serious questions about its sustainability,” he said.

ACEP’s recommendation

A statement issued and signed by its deputy Executive Director, Mr Benjamin Boakye said the centre would recommend that the government continue to grow the Heritage Fund, explaining that “the purpose of establishing the fund is still valid today and we should not deny the future generation an opportunity to decide what they do with their share of the resources as was done by past leader with mineral revenues.”

The ACEP also recommended that the law be amended to allow 50 per cent of the Annual Budget Funding Amount (ABFA) to support the Free SHS programme, which would be a more equitable way of distributing the resources than financing “ghost project” through the distribution of oil revenues.

The centre also explained that the government should take steps to streamline the operations of the Ghana National Petroleum Corporation (GNPC) to focus on its core mandate and redirect some of its allocation into the budget to finance education.