Out of the total $5.9 billion revenue earned from crude oil production since the country’s first crude oil lifting in 2011, an estimated $2.2 billion has been allocated to the Annual Budget Funding Amount (ABFA).
This represents some 38.63 percentage points of the total petroleum receipts from 2011 to 2019, making it the biggest recipient of petroleum revenue according to the 2019 Ghana Petroleum Industry Report by the Ghana Chamber of Bulk Oil Distributors (CBOD).
ABFA, which receives upto 70 per cent of benchmark petroleum revenue, is earmarked to support government expenditure in a particular fiscal year.
Closely behind the ABFA in terms of revenue allocation, is the Petroleum Holding Fund (PHF) with some $1.8 billion allocation made to it. The Ghana National Petroleum Corporation (GNPC) received similar allocation of $1.8 billion for the same period from 2011 to 2019.
As required by Section 21(4) of the Public Revenue Management Act (PRMA), not less than 70 percent of the ABFA is to be utilised on public investment expenditures.
In that regard, between 2011 and 2016, government selected four priority spending areas as prescribed by the PRMA. In the first three years of oil receipts – 2011 to 2013 – namely, Expenditure and Amortization of Loans for Oil and Gas Infrastructure, Agriculture Modernization, Roads and Other Infrastructure, and Capacity Building were prioritized for ABFA expenditure.
These were maintained for the years 2014-2016. The total cedi equivalent of ABFA to the priority areas over the six years was about GH¢3.3 billion, of which Road and Other Infrastructure received the highest share GHS1.73 billion which forms 52.35 percent of total ABFA expenditure. This was followed by expenditure on Amortisation of Loans for Oil and Gas Infrastructure, amounting to about GHS860 million (26 percent).
Priority areas of capacity building and agriculture modernization received the least share of GHS357 million (10.83 percent) and GHS357 million (10.80 percent),
respectively. There were no allocations for Expenditure on Amortization of Loans for Oil and Gas Infrastructure in 2016 and for Capacity Building in 2014.
In 2017, the priority areas were changed to Road, Rail, & Other Critical Infrastructure Development; Agriculture; Physical Infrastructure & Service Delivery in Education; and Physical Infrastructure & Service Delivery in Health.
A total of about GHS3.6 billion was distributed to the priority areas from 2017 to 2019. Out of this amount, Road, Rail and other Critical Infrastructure Development received the highest share of GHS1.79 billion (49.48 percent). Physical infrastructure and service delivery in education received the second highest share amounting to about GHS1.49 billion (41.07 percent).
This was mainly used to finance governemnt’s flagship programme on Free Senior High School. Physical Infrastructure and Service Delivery in Health and Agiculture received the least share of ABFA disbursements of GHS263 million and GHS78 million, respectively.
Cumulatively, the two sectors received about 9.5 percent of total ABFA disbursements.
The $5.9 billion petroleum revenues accrued from 2011 to 2019, resulted from royalties, corporate income taxes, surface rentals and the carried and participating interests (CAPI) charges on oil production from the 3 oil fields – Jubilee, Sankofa and TEN.
Royalties for the 8-year period contributed over $1.4 billion (24.2%) to total revenue, corporate income taxes for the same period also contributed $940 million (15.91%) with CAPI and surface rentals contributing $3.5 billion (54.47%) and 7.6 million (0.13%) respectively.
