2021 Resource Governance Index: NRGI places Ghana’s oil sector in ‘good’ performance band
The Natural Resource Governance Institute (NRGI) in its 2021 Resource Governance Index assessment of Ghana’s oil and gas industry, has placed the sector in a ‘‘good’’ performance band with a composite score of 78 out of 100 points.
The score marks 11 points increase in the 67 points score recorded by the index in 2017.
The improvement in the country’s score is largely owed to strengthened resource governance underpinned by improvements across both the index’s value realization and revenue management components.
According to the NRGI, the following accounted for the higher composite score of 78 points by the country’s oil and gas industry in its resource governance Index;
- Ghana’s oil and gas sector’s move into the “good” performance band in the 2021 RGI is driven by improvements in the governance of licensing and national budgeting along with continued improvements of the state-owned Ghana National Petroleum Company (GNPC) and the Ghana Stabilization Fund, the country’s sovereign wealth fund.
- Adoption of new laws regarding licensing and national budgeting strengthened Ghana’s extractives legal framework and helped drive the 2021 RGI score increase.
- Both law and practice scores increased, but the difference between them widens from -7 to -22, signaling a worrying “implementation gap.”
- GNPC improved its performance through commodity sales disclosures, but areas for future improvement include the timeliness of disclosures and aspects of corporate governance.
- The Ghana Stabilization Fund scored a full 100 points on governance, owing to new disclosures of assets and asset classes.
- Ghana’s oil and gas sector outperformed the older gold mining sector owing to enhanced transparency and accountability in the oil and gas sector legislative framework.
Ghana’s oil and gas sector has grown steadily since production began in the Jubilee oil field in 2010, with hydrocarbon exports increasing from $127 million in 2010 to over $4.9 billion in 2019, comprising almost 23 percent of Ghana’s merchandise exports.
The governance of the sector has improved since the 2017 RGI, driven by a 14-point increase in value realization and 20-point increase in revenue management. Ghana’s enabling environment continues to provide a solid base for good resource governance, although areas for improvement remain.
The Resource Governance Index (RGI) serves as a key point indicator in the extractive sector governance in resource-producing countries around the world. It also serves as a global benchmark, country and sector diagnostic tool, and a roadmap for policy and practice reform.
The 2021 Resource Governance Index assesses how 18 resource-rich countries are managing their oil, gas, and mineral wealth. The composite index has three components. Two measure essential characteristics of the extractive sector, namely value realization and revenue management, and the third analyses the enabling environment.
