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26.11.2010 Business & Finance

Oil Cash As Collateral

By Daily Guide
Oil Cash As Collateral
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IT IS becoming clear that the ruling National Democratic Congress (NDC) is desirous of using the nation's newly found oil resource as collateral to contract loans as the Majority Leader in Parliament, Avoka Apul Cletus on Wednesday pleaded with Parliament to allow Government to borrow against the oil revenue for the development of the country.

But the Minority has noted that it will oppose any attempt to use the oil revenue as collateral for future borrowing of loans since using petroleum account as security for loans could be the beginning of 'oil curse' in Ghana.

Clause 5 of the Petroleum Revenue Management Bill, which is currently before Parliament, prohibits the use of the Petroleum Account for the provision of credit to government, public agencies and private sector entities.

The provision added that 'there is not to be future borrowing against proven petroleum reserves'.

However, making closing submissions on the debate of the Bill, Hon. Avoka, who is also the Member of Parliament (MP) for Zebilla said, 'As a sovereign country, we should not make laws that would tie the hands of Government but laws that would stand the test of time.'

'It would be unfair to tie the hands of the Government not to use the oil revenue as collateral to contract loans for the development of the country,' the Majority Leader stated.

Not mentioning any particular resource, Hon. Avoka claimed Dr. Kwame Nkrumah, Ghana's first President used the nation's resources as collateral for contracting loans for the construction of Tema Motorway, Akosombo Dam and Tema Harbour, landmark infrastructure, all of which have stood the test of time in the country's development process.

The Majority Leader's statements confirmed the fears of the Minority, led by Osei Kyei-Mensah-Bonsu that some NDC MPs would make amendment to the Clause of the Bill to allow government to use the petroleum revenue as collateral to borrow loans.

The Minority Spokesperson on Energy and MP for Navrongo Central, Joseph Kofi Adda and his colleagues have indicated that they would resist any attempt to use the oil revenue as collateral for future borrowing of loans.

'We will resist this attempt because if that is allow to happen, it will be the beginning to the oil curse in Ghana,' Hon. Adda had warned whilst making contributions on the Petroleum Revenue Management Bill.

Equally a worry to the Minority is the apparent lack of clear guidelines on how the oil revenue will be used, further raising serious concerns about transparency and accountability in the management of the petroleum resource.

A Former Minister of State at the Ministry of Finance and Economic Planning and MP for Old Tafo, Dr. Anthony Akoto Osei asked government to show the projects and activities for which the oil revenue will be used for.

This, according to him, will enable Ghanaians to track the utilization for the oil revenue as they did with the HIPC Funds for the construction and labeling of schools, toilets and other infrastructure.

MP for Wenchi, Prof. George Gyan-Baffour called for the creation of a separate account outside the consolidated fund for industrial transformation of the economy, cautioning that the revenue should not be used for general budget support.

'The monies from the petroleum account should not be co-mingled with revenues from the traditional revenue sources', he stressed.

The new fund, he said, should be managed by eminent citizens of the country without any political coloring and not by faceless individuals who implement the national budget such as accountants, accounts clerks, directors, chief directors, Metropolitan, Municipal and District Chief Executives.

Such a move, he observed, would promote effective monitoring and accountability.

By Awudu Mahama & Sheilla Sackey

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