[ 2017-02-16 ]
African Centre for Energy Policy (ACEP)
Stay away from Heritage Fund – ACEP warns government
The African Centre for Energy Policy (ACEP) has
warned the government to desist from using the
country’s oil revenue to finance its free second
cycle education policy. It said the government
should rather focus on growing the fund which is
still relevant and will serve a very important
purpose in the future.
A statement signed by the Deputy Executive
Director of ACEP, Benjamin Boakye, said, although
ACEP supports the use of the fund for pro-poor
sectors of education agriculture, it wants the
government to be minded by the Petroleum Revenue
Act, Act 815 which guides the use of the fund.
Senior Minister, Yaw Osafo Maafo on Tuesday [14th
February] told the media that government will get
the necessary legislation to enable it use the
Heritage Fund which is 9 percent of the revenue
accrued to Ghana from its crude oil proceeds to
finance the president’s Free Senior High School
policy. But ACEP said, “much as we support the use
of oil revenue for financing education, we want
government to recognize the significance of the
heritage fund and not touch it.”
Read details of ACEP’s statement below:
ACEP has been campaigning for the use oil revenue
to finance the pro-poor sectors of education and
agriculture for four years. Therefore, we cannot,
in principle, be against the use of oil revenue to
However, we want to alert government that the
petroleum revenues are governed by the Petroleum
Revenue Management Act (PRMA), Act 815, which was
passed after deep consultation with citizens,” it
said. In spite of many implementation challenges,
the PRMA has been a model for many countries and
Ghana can only do better at improving on
transparency and accountability around the use of
the oil revenues.
Much as we support the use of oil revenue for
financing education, we want government to
recognize the significance of the heritage fund
and not touch it. ACEP therefore states its
position on the use of oil revenue to finance the
free SHS as follows; 1. Heritage Fund Still
Relevant– the principle of intergenerational
equity which informed the establishment of the
fund ensure that ownership of the resources is
shared among the living and the yet unborn.
It also ensures sustenance of revenue flow after
the oil has been exhausted. It is easier to assume
that those of us living today can invest the
heritage fund to benefit the future generation.
This assumption is overly simplistic and takes
away the right of the future generation to decide
on their own priorities. The heritage fund
represents about 9% of Benchmark Revenue (BR),
leaving 91% of the BR for the national budget.
This conservative amount left for the future
should not attract uncontrolled appetite to spent.
For the past 6 years the total payments made into
the fund plus interest is $277 million. This is
not enough to fund only about 3 years of the cost
items to be waived by government estimated to be
about GHS327million, holding the 2015 enrolment
constant. With anticipated growth in enrollment
occasioned by the programme, the heritage fund
could be woefully inadequate to sustain the free
2. Use the Annual Budget Funding Amount (ABFA) –
The credible window for financing the free SHS
policy from oil revenues will be through the ABFA.
It must however be highlighted that the current
architecture of the PRMA allows for only 30% of
the ABFA for recurrent expenditure. Given that
most of the cost items for the implementation of
the Free SHS are recurrent expenditures,
government will have to amend the law to be able
to spend more that 30% of the ABFA.
ACEP will want to recommend that; 1. Government
should continue to grow the Heritage Fund. 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.
2. The PRMA should be amended to allow 50% of the
ABFA to support the Free SHS programme. This will
be a more equitable way of distributing the
resources than financing “ghost project” through
thin distribution of oil revenues.
3. Reduce allocation to GNPC – Government should
take steps to streamline the operations of GNPC to
focus on its core mandate and redirect some of its
allocation into the budget to finance education.
4. Use part of Solid Mineral Revenue to support
the Free SHS– this is an opportunity for
government to introduce governance framework
similar to the PRMA on mineral revenues and
allocate portion of mineral revenues to education.
5. Government should recognize that the capital
budget of the education sector has been lower than
6% of the total sector budget in recent past,
therefore, education sector financing should
equally be big on improving the asset base of the
Source - citifmonline.com
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