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Abstract
The Petroleum Revenue Management Act, 2011 established the Ghana Petroleum Funds (GPF) for the purposes of investing and saving petroleum revenues. This article argues that, while the Act provides clear legal and governance frameworks for the GPF, the effectiveness of the GPF could be hindered by certain flaws inherent in the Act. The Act does not sufficiently empower some of the oversight mechanisms that are vital for the efficient management of any sovereign wealth fund. Moreover, the Act appears to place needlessly broad discretionary powers on the Minister of Finance by empowering the Minister to declare information relating to the GPF as confidential if they think that disclosure of such information would prejudice the performance of the GPF.
Notes
1 Petroleum Revenue Management Act, 2011 (Act 815), Preamble.
2 On the concept of ‘resource curse’ see Richard M Auty, Sustaining Development in Mineral Economies: The Resource Curse Thesis (Routledge 1993); Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (University of California Press 1997); Michael L Ross, ‘The Political Economy of the Resource Curse’ (1999) 51 World Politics 297.
3 Petroleum Revenue Management Act, 2011, ss 2(1) and 4.
4 Ibid, s 2.
5 Ibid, s 11.
6 See International Working Group of Sovereign Wealth Funds, Sovereign Wealth Funds: Generally Accepted Principles and Practices, 27 (hereafter ‘Santiago Principles’).
7 Ibid, 4.
8 Petroleum Revenue Management Act, 2011, s 11(1).
9 Ibid, s 9(2).
10 Ibid, s 10(2) (as amended by the Petroleum Revenue Management (Amendment) Act, 2015, s 3).
11 Ibid, s 6.
12 Ibid, s 3(2).
13 Ibid, s 9(3) and s 10(3).
14 Ibid, s 23(1)(a).
15 Ibid, s 23(1)(b).
16 Ibid, s 23(3).
17 Ibid, s 23(4).
18 Bank of Ghana, Petroleum Holding Fund & Ghana Petroleum Funds Semi Annual Report: January 1 – June 30, 2016, 4 www.bog.gov.gh/public-notices/2656-petroleum-holding-fund-phf-a-gpfs-semi-annual-report last accessed 25 October 2016.
19 See Evaristus Oshionebo, ‘Managing Resource Revenues: Sovereign Wealth Funds in Developing Countries’ (2015) 15 Asper Review of International Business and Trade Law 217, 224–35.
20 See Nigeria Sovereign Investment Authority (Establishment, Etc) Act, 2011 (Act No 15), s 1(2) and Angola’s Presidential Decree No 48/11, Article 1(2).
21 Oshionebo (n 19) 226–30.
22 Ibid, 230.
23 Abdullah Al-Hassan and others, ‘Sovereign Wealth Funds: Aspects of Governance Structures and Investment Management’ (2013) IMF Working Paper WP/13/231, 11 www.imf.org/external/pubs/ft/wp/2013/wp13231.pdf last accessed 9 February 2016.
24 See Santiago Principles (n 6) 15 (stating that SWFs that are established as separate legal entities tend to ‘have a governance structure that clearly differentiates an owner, a governing body, and management of the SWF’).
25 Petroleum Revenue Management Act, 2011, s 30(1).
26 Ibid, s 38(1).
27 Ibid, s 38(2).
28 Ibid, s 38(3).
29 Ibid, s 26.
30 Ibid, s 26(2).
31 Santiago Principles (n 6) Principles 18 and 19.
32 Oshionebo (n 19) 235–39.
33 Petroleum Revenue Management Act, 2011, s 27(1).
34 Ibid, s 61.
35 Ibid, s 27(2).
36 See Report of the Auditor-General on the Management of the Petroleum Funds for the Period 1 January 2013 to 31 December 2013, 38–39 www.wgei.org/wp-content/uploads/2015/09/Petroleum-Fund-2013.pdf last accessed 10 April 2016 (hereafter ‘Report of the Auditor-General 2013’).
37 See Jennifer Drysdale, ‘Five Principles for the Management of Natural Resource Revenue: The Case of Timor-Leste’s Petroleum Revenue’ (2008) 26 Journal of Energy & Natural Resources Law 151, 165.
38 Ibid, 164.
39 See Kyle Hatton and Katharina Pistor, ‘Maximizing Autonomy in the Shadow of Great Powers: The Political Economy of Sovereign Wealth Funds’ (2011) 50 Colum J Transnat’l L 1, 12 and 26.
40 See Drysdale (n 37) 164.
41 See Joseph C Bell and Teresa M Faria, ‘Critical Issues for a Revenue Management Law’ in Macartan Humphreys, Jeffrey D Sachs and Joseph E Stiglitz (eds), Escaping the Resource Curse (Columbia University Press 2007) 286, 299 (arguing that the prohibition of domestic investment ‘helps limit political influence in the funds’ choice of investments … ’).
42 Ibid, 299.
43 Law No 8/2004, Oil Revenue Law, Article 13(5).
44 Petroleum Fund Law, Law No 9/2005, Article 14.2.
45 Petroleum Fund Law, Law No 9/2005, Article 14.2.
46 See Report of the Auditor-General 2013 (n 36) 17–18.
47 See Business & Financial Times, ‘Investing Petroleum Fund in Foreign Portfolios Questioned’ (4 September 2015) http://thebftonline.com/commodities/oil-gas/15161/investing-petroleum-fund-in-foreign-portfolios-questioned.html last accessed 25 October 2016; Business & Financial Times, ‘Petroleum Funds Disappoint … Heritage Fund Yields Negative Returns’ (18 August 2015) http://thebftonline.com/business/economy/14956/Petroleum-Funds-disappoint-Heritage-fund-yields-negative-returns.html last accessed 8 November 2016.
48 Public Interest and Accountability Committee, Report on Management of Petroleum Revenues for Year 2013: Annual Report, 54 http://piacghana.org/resources/2013PIACAReport239.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Annual Report 2013’).
49 Law No 8/2004, Oil Revenue Law, Article 11.
50 Petroleum Fund Law, Law No 9/2005, Article 11.4.
51 See generally Stewart E Sterk, ‘Rethinking Trust Law Reform: How Prudent Is Modern Prudent Investor Doctrine?’ (2010) 95 Cornell L Rev 851; Philip J Renaud, ‘Alberta’s “Prudent Investor” Rule’ (2003) 22 Estates, Trusts & Pensions Journal 309.
52 Stephen M Penner, ‘International Investment and the Prudent Investor Rule: The Trustee’s Duty to Consider International Investment Vehicles’ (1995) 16 Mich J Int’l L 601, 610.
53 Petroleum Revenue Management Act, 2011, s 26(2).
54 Bell and Faria (n 41) 297.
55 Oshionebo (n 19) 240.
56 Santiago Principles (n 6) Principle 4.
57 Ibid, 14.
58 Petroleum Revenue Management Act, 2011, s 12(1).
59 Ibid, s 12(2).
60 Ibid, s 12(3). However, ‘a withdrawal from the Ghana Stabilisation Fund for the purpose of alleviating a shortfall in actual petroleum revenue shall not exceed 75% of the balance standing to the credit of the Ghana Stabilisation Fund at the beginning of the financial year’. Petroleum Revenue Management Act, 2011, s 12(6) (introduced by the Petroleum Revenue Management (Amendment) Act, 2015, s 5(b)).
61 Petroleum Revenue Management Act, 2011, s 12(4).
62 Ibid, ss 13 and 20(1).
63 Ibid, s 10(4).
64 Ibid, s 10(4).
65 Ibid, s 23(3).
66 Public Interest and Accountability Committee, ‘Position of the Public Interest and Accountability Committee (PIAC) on Placement of Cap by the Minister of Finance on the Ghana Stablisation Fund’ (Press Release, 7 August 2014) http://piacghana.org/resources/PressStatementII253.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Press Release, 7 August 2014’).
67 Ibid.
68 Africa Centre for Energy Policy, Three Years of Petroleum Revenue Management in Ghana: Transparency without Accountability (Public Interest Report No 2, July 2014) (arguing at iv that ‘the cap of US$250 million was without any basis except to deny the Fund money’ and at 37 that the Minister undermined the Fund in favour of expanding the government’s fiscal space) http://s3.amazonaws.com/acep-static/reports/ACEP-Report-PRMA-Final.pdf last accessed 11 May 2016.
69 Public Interest and Accountability Committee, Report on Management of Petroleum Revenues for Year 2014: Annual Report, 49 http://piacghana.org/resources/2014PIAC252.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Annual Report 2014’).
70 See PIAC, Press Release, 7 August 2014 (n 66) (stating that ‘[i]n the case of the Ghana Stabilisation Fund, Parliament was not informed about the amount that was expected to be in excess and therefore specific approval was required before the amount could be moved out of the Ghana Stabilisation Fund’).
71 PIAC, Press Release, 7 August 2014 (n 66).
72 Ibid.
73 Ibid.
74 2015 Reconciliation Report on the Petroleum Holding Fund (submitted to Parliament by the Minister for Finance, March 2016) 20 www.mofep.gov.gh/?q=petroleum-reports last accessed 4 April 2016.
75 Ibid, 20.
76 Bank of Ghana (n 18) 4.
77 On resource dependency see generally, Morgan Bazilian and others, ‘Oil, Energy Poverty and Resource Dependence in West Africa’ (2013) 31 Journal of Energy & Natural Resources Law 33.
78 See Bell and Faria (n 41) 305; Abdullah Al Faruque, ‘Transparency in Extractive Revenues in Developing Countries and Economies in Transition: A Review of Emerging Best Practices’ (2006) 24 Journal of Energy & Natural Resources Law 66; Philippe Le Billon, ‘Securing Transparency: Armed Conflicts and the Management of Natural Resource Revenues’ (2006–07) 62 International Journal 93; Alexandra Gillies and Antoine Heuty, ‘Does Transparency Work? The Challenges of Measurement and Effectiveness in Resource-Rich Countries’ (2011) 6 Yale Journal of International Affairs 25.
79 Philip Swanson, Mai Oldgard and Leiv Lunde, ‘Who Gets the Money? Reporting Resource Revenues’ in Ian Bannon and Paul Collier (eds), Natural Resources and Violent Conflict: Options and Actions (The World Bank 2003) 43 (arguing that disclosure of information ‘is a means to achieve transparency’).
80 International Monetary Fund (IMF), Guide on Resource Revenue Transparency (IMF 2007) 9 www.imf.org/external/np/pp/2007/eng/101907g.pdf last accessed 7 June 2016.
81 See http://eiti.org last accessed 7 June 2016.
82 See www.publishwhatyoupay.org last accessed 7 June 2016.
83 Santiago Principles (n 6) Principles 2, 4, 5 and 17.
84 Ibid, Principle 11.
85 Ibid, Principle 17.
86 Petroleum Revenue Management Act, 2011, s 52.
87 Ibid, s 8(1–2).
88 Ibid, s 8(3).
89 Ibid, s 48(1).
90 Ibid, s 48(2)(a).
91 Ibid, s 48(2)(c) and (d).
92 See Swanson, Oldgard and Lunde (n 79) 43.
93 Petroleum Revenue Management Act, 2011, s 49(1) and (2).
94 Ibid, s 49(7).
95 Ibid, s 50.
96 Ibid, s 49(3).
97 Ibid, s 49(3) and (4).
98 Bell and Faria (n 41) 307.
99 Ibid, 306.
100 Petroleum Revenue Management Act, 2011, s 49(6).
101 Law No 8/2004, Oil Revenue Law, Article 17(1) and (2).
102 Law No 8/2004, Oil Revenue Law, Article 20(2).
103 Law No 8/2004, Oil Revenue Law, Article 20(3).
104 Law No 8/2004, Oil Revenue Law, Article 20(1) providing that:
Confidentiality clauses or other mechanisms included in Oil Contracts or in any other transaction instrument concerning any Oil Revenue or Oil Resource that prevent or attempt to prevent access to documents and information pursuant to Article 17 of this law shall be null and void, and contrary to public policy.
105 Petroleum Revenue Management Act, 2011, s 49(5).
106 See Rhuks Ako and Nilopar Uddin, ‘Good Governance and Resource Management in Africa’ in Francis N Botchway (ed), Natural Resource Investment and Africa’s Development (Edward Elgar 2011) 21, 24–25.
107 Colin Scott, ‘Accountability in the Regulatory State’ (2000) 27 Journal of Law and Society 38, 40.
108 Ibid, 39.
109 Andrew Bauer, ‘Independent Oversight of Natural Resource Funds’ (Policy Brief, Revenue Watch Institute & Vale Columbia Center on Sustainable International Investment, April 2014) 1 www.resourcegovernance.org/sites/default/files/NRF_RWI_BP_Oversight_EN_fa.pdf last accessed 14 July 2016.
110 See Santiago Principles (n 6) Principle 10.
111 Petroleum Revenue Management Act, 2011, s 48(1).
112 Ibid, s 48(1).
113 Ibid, s 28(2).
114 Ibid, s 28(1).
115 See Securities and Exchange Commission of Ghana, Securities and Exchange Commission Regulations, 2003 (LI 1728), s 55(1) which provides that:
An issuer of corporate securities to the public shall make available to the Commission, shareholders and bondholders and the Stock Exchange on which it is listed before the expiry of one month from the end of each quarter, financial statements for the quarter which contain the particulars specified in this regulation and any other information that may be specified by the Commission …
116 See BBC, ‘Nigeria: Oil-gas Sector Mismanagement Costs Billions’ (25 October 2012) www.bbc.com/news/world-africa-20081268 last accessed 24 October 2016.
117 Petroleum Revenue Management Act, 2011, s 31(1).
118 Ibid, s 30(1).
119 Ibid, s 29.
120 Ibid, s 29.
121 Ibid, s 29.
122 Persons prohibited from membership of the IAC are: non-citizens; persons convicted of a felony or an offence involving dishonesty; persons adjudged to be of unsound mind; and persons disqualified or suspended from practising their profession by order of a competent authority. See ibid, s 31(2).
123 Petroleum Revenue Management Act, 2011, s 55(5).
124 Ibid, s 31(1) as amended by the Petroleum Revenue Management (Amendment) Act 2015, s 10. Prior to this amendment, section 31 of the Act provided that at least one member of the IAC shall be female.
125 Dominik Kopinski, Andrzej Polus and Wojciech Tycholiz, ‘Resource Curse or Resource Disease? Oil in Ghana’ (2013) 112 African Affairs 583, 587.
126 See George M Bob-Milliar, ‘Party Factions and Power Blocs in Ghana: A Case Study of Power Politics in the National Democratic Congress’ (2012) 50 Journal of Modern African Studies 573, 581 (indicating that during Kufour’s presidency his faction of the ruling National Democratic Congress monopolised all the key sectors of the state apparatus particularly in terms of allocation of ministerial portfolios).
127 Ransford Gyampo, ‘Saving Ghana from Its Oil: A Critical Assessment of Preparations So Far Made’ (2010) 4(3a) African Research Review 1, 6.
128 Bell and Faria (n 41) 295 (arguing that membership of such committees ‘should be broad enough to ensure political support from the different branches of government and political constituencies’).
129 Julia Black, ‘Constructing and Contesting Legitimacy and Accountability in Polycentric Regulatory Regimes’ (2008) 2 Regulation & Governance 137, 153.
130 Petroleum Revenue Management Act, 2011, s 52.
131 Ibid, s 56(a) and (b).
132 Ibid, s 56(d).
133 Ibid, s 56(c).
134 Ibid, s 54(1) (as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), s 12). Currently, the PIAC’s members consist of representatives of the Ghana Academy of Arts and Sciences; civil society and community-based organisations; Trades Union Congress; think tanks; National House of Chiefs; Association of Queen Mothers; Association of Ghana Industries and Chamber of Commerce; Ghana Journalists Association; Institute of Chartered Accountants; Ghana Extractive Industries Transparency Initiative; Christian groups; Federation of Muslim Councils; and the Ghana Bar Association. See PIAC, ‘Members’ http://piacghana.org/members.php last accessed 24 October 2016.
135 Petroleum Revenue Management Act, 2011, s 55(1).
136 Ibid, s 55(2–4).
137 Ibid, s 55(5).
138 Ibid, s 55(6).
139 Ibid, s 55(6).
140 The reports are available at http://piacghana.org last accessed 26 May 2017.
141 Nelson Oppong, ‘Ghana’s Public Interest and Accountability Committee: An Elusive Quest for “Home-grown” Transformation in the Oil Industry’ (2016) 34 Journal of Energy & Natural Resources Law 313, 335.
142 See, for example, PIAC, Press Release, 7 August 2014 (n 66).
143 PIAC, Annual Report 2013 (n 48) 65.
144 Public Interest and Accountability Committee, Report on Management of Petroleum Revenues for Year 2012: Annual Report, at ii http://piacghana.org/resources/2012%20PIAC%20Annual%20Report236.pdf last accessed 6 April 2016 (hereafter ‘PIAC, Annual Report 2012’). See also PIAC, Annual Report 2014 (n 69) 72.
145 PIAC, Annual Report 2013 (n 48) viii; PIAC, Annual Report 2014 (n 69) 72.
146 PIAC, Annual Report 2013 (n 48) 65.
147 Ibid, 64.
148 Ibid, 64 (indicating that funds for PIAC’s 2013 activities were released by the government in December 2013). See also PIAC, Annual Report 2012 (n 144) ii.
149 PIAC, Annual Report 2014 (n 69) 72.
150 PIAC, Annual Report 2014 (n 69) 73; PIAC, Annual Report 2013 (n 48) viii; PIAC, Annual Report 2012 (n 144) 35.
151 Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), s 13.
152 Petroleum Revenue Management Act, 2011, s 57 (as amended by Petroleum Revenue Management (Amendment) Act, 2015 (Act 893), s 13).
153 See Oppong (n 141) 326–67.
154 The Africa Centre for Energy Policy, The Centre for Public Interest Law and Friends of the Nation, ‘Review of the Petroleum Revenue Management Act 2011 (Act 815), Proposals Presented to the Ministry of Finance and Economic Planning’ 12 http://acepghana.com/wp-content/uploads/2013/12/ATT00051.pdf last accessed 7 June 2016.
155 Ibid.
156 Petroleum Revenue Management Act, 2011, s 52(c).
157 Law No 8/2004, Oil Revenue Law, Article 23.
158 Law No 8/2004, Oil Revenue Law, Article 24(2).
159 Oppong (n 141) 333.
160 Ibid, 333.
161 Ibid, 319.
162 Ibid, 333.
163 Kopinski, Polus and Tycholiz (n 125) 597.
164 Oppong (n 141) 335 (arguing that the ‘PIAC’s participatory roots have contributed greatly to an enhanced legitimacy that is unrivalled by other “good governance” initiatives in the oil industry’ and that the ‘PIAC is arguably the body that has solely appropriated the narrative of representing the “public interest” in the oil industry’).
165 James G Simpson, ‘Ghana and the Ideal of the Citizen-Shareholder: A Corporate-Law Response to the Resource Curse’ (2016) 65 Duke Law Journal 1281, 1299.
166 Oppong (n 141) 332.
167 Ibid, 332 and 336.
168 See Petroleum Revenue Management Act, 2011, ss 29 and 52.
169 Scott (n 107) 52.
170 Bell and Faria (n 41) 295.
171 Petroleum Revenue Management Act, 2011, ss 42–47.
172 Ibid, ss 44 and 45.
173 Ibid, s 45(3).
174 Ibid, s 46(2).
175 Ibid, s 46(3).
176 Ibid, s 46(5).
177 Ibid, s 46(4).
178 Ibid, s 47.
179 International Organization of Supreme Audit Institutions, Mexico Declaration on SAI Independence, www.nku.gov.sk/documents/10272/98330/Mexico+Declaration.pdf last accessed 14 July 2016.
180 Constitution of the Republic of Ghana 1992, s 70(1).
181 Office of the Auditor-General, Paper on Proposals for Amendment of Constitutional Provisions on the Office at 5 www.ghaudit.org/reports/Proposal+for+Constitutional+Amendment.pdf last accessed 26 May 2017 (hereafter ‘Proposals for Amendment’).
182 Constitution of the Republic of Ghana 1992, s 71(1).
183 Office of the Auditor-General, Proposals for Amendment (n 181) 6.
184 Constitution of the Republic of Ghana 1992, s 187(7).
185 International Organization of Supreme Audit Institutions, The Lima Declaration, section 5(2) www.intosai.org/issai-executive-summaries/view/article/issai-1-the-lima-declaration.html last accessed 14 July 2017.
186 Ibid, section 5(1).
187 Office of the Auditor-General, Proposals for Amendment (n 181) 10.
188 Constitution of the Republic of Ghana 1992, s 187(13).
189 Constitution of the Republic of Ghana 1992, s 146(1).
190 Kopinski, Polus and Tycholiz (n 125) 599 (observing that the Act ‘represents a prudent attempt to avoid one of the main consequences of the resource curse – waste and financial mismanagement’).
191 See Drysdale (n 37) 159.
192 Gyampo (n 127) 3 and 6.
193 Oppong (n 141) 336.
194 Joe Amoako-Tuffour, ‘Public Participation in the Making of Ghana’s Petroleum Revenue Management Law’ (October 2011) www.resourcegovernance.org/sites/default/files/documents/ghana-public-participation.pdf last accessed 1 November 2016.
195 Oppong (n 141) 318.