To allow for credibility, government should allow an independent body, possibly the Public Interest and Accountability Committee (PIAC), to do the annual forecasting for government’s take of oil revenues, the African Centre for Energy Policy (ACEP), has said.

“PIAC is already doing its work; it only needs to build its capacity to do the revenue forecasting,” Mohammed Amin Adam, Executive Director of ACEP told the B&FT.

Benchmark oil revenues have been missed since oil production started; the target was not met in both 2011 and 2012 but was exceeded for 2013.

“With the Stabilisation Fund, for example, if you do not collect up to the target, the law says no transfers will be made; and if for several years you do not collect up to the target, then the fund will not receive transfers. That is, in the case of over-estimation,” Mohammed Amin explained.

“But in the case of under-estimation, which is what we saw in 2013, we collected far more than we estimated; and because the minister wanted to find a way of spending the excess money, he put a lower ceiling on the Stabilisation Fund so that excess revenues -- which should have gone to the Stabilisation Fund -- now goes to the Contingency Fund, and the Oil Revenue Management Law does not regulate how the Contingency Fund is utilised.

“So, if I am the minister, I may not even over-estimate because if I do and no money goes to the Stabilisation Fund people will talk. So I will under-estimate and then find another way to spend the excess money. But if you have an independent committee do the estimation, the minister’s credibility is assured. If we do not meet the target, nobody then accuses the minister,” he said.

But the Chairman of the Finance Committee of Parliament, James Klutse Avedzi, disagreed -- saying that the targets are being missed because “this is the first time we, as a country, are doing this. In estimating the volumes, it is difficult if you do not have historical data. So, with time the formula will be precise and therefore the benchmark revenue will be something that we can achieve.”

He added: “I don’t support it in the sense that if an independent body tells the Minister of Finance that you are going to generate US$10bn and the Minister of Finance would have to use that figure in the budget: if at the end of the day that money is not realised, who are we going to blame? Do we blame the Minister of Finance or blame that body? So I believe that we should make the formula used in estimating the benchmark revenue more transparent. Once the formula is good and is followed, there is no need for an independent body.”

In 2011, Government projected to receive GH¢1.2billion from oil, including corporate taxes of about GH¢600 million. The total amount earned however came down to GH¢667million, representing a shortfall of GH¢583million.

The benchmark revenue for 2012 was over GH¢1billion, but the amount actually received came down to GH¢562.43million.

For the third quarter of 2013, just GH¢1,358.18 million was received -- compared to a total 2013 Budget estimate of GH¢1,122.72million.

“The main reasons for the positive variance of US$125.56million (GH¢235.40million) were the realisation of more than expected inflows from corporate income tax and increased production,” the budget statement explained.

For the 2014 fiscal year, estimated total revenue from oil that will accrue to the budget is GH¢1,709.4million. It remains to be seen which of the three scenarios -- meeting the target, missing it downward or missing it upward -- will pan-out at the end of the year.