Africa Centre for Energy Policy (ACEP) has predicted significant oil revenue losses in Ghana’s due to the Coronavirus (Covid-19) pandemic.
The think tank said the $1.567 billion revenue expected to be accrued at the end of the year 2020 will drop to $743 million, causing a revenue loss of 53 percent.
The think tank attributes the hit to the novel Coronavirus which is continually having a toll on oil economies globally.
“In ACEP’s estimation, governments' projection of oil revenues will experience a shortfall of between 40 to 55 percent in oil-producing countries in Africa. Projected oil prices in the 2020 budgets of these countries is about $55 to $68 per barrel.
“Given the current global economic condition, effects of COVID-19, and Russia's quest to sustain oil price below the marginal cost of shale production, oil price recovery is expected to be in the region of $45 per barrel by the end of 2020. Therefore, the likely average oil price is estimated to be about $40 per barrel for the year”, a statement signed by Executive Director Benjamin Boakye has said.
ACEP believes this will have severe implications for the budget of the West African country particularly physical infrastructure and debt servicing which Ghana is not exempted.
In line with this, the energy policy think tank is recommending that the government of Ghana should ensure the transmission of the lower oil price to support industry and consumers of petroleum products.
In addition, it wants government to come up with a new budget that accounts for the extraordinary drop in oil prices while also putting aside stabilisation funds with adequate buffer that is capable of smoothening significant shortfalls in the budget in the future.
Full ACEP statement below: