Ghana’s discovery of oil and gas in commercial quantities, in 2007, triggered a sense of optimism about the prospects for accelerated development in the country. However, pessimism about oil and gas revenues set in when the country ran into a liquidity crisis and, in 2014, it had to implore the International Monetary Fund (IMF) for assistance. This development has spurred research interest into the taxation and management of revenue accruing from the oil and gas sector. However, to date most research on oil and gas taxation and revenues has been on economic development, with a dearth of focused studies in oil and gas taxation and revenue management from a legal perspective. This study fills this knowledge gap through an examination of oil and gas taxation and revenue management in Ghana.
This thesis is qualitative by design, although quantitative data was used to highlight the revenue performance indicators from the oil and gas sector. The tax and revenue management policies and regulations of a number of oil-rich countries were briefly reviewed and compared to Ghana’s oil and gas taxation and revenue management legislation. For comparative purposes, relevant literature, fiscal legislation and data from four oil and gas producing countries - Nigeria, Norway, Canada and the United Kingdom – were also examined in some detail.
A key finding is the noncompliance of the Government of Ghana with the provisions in the Petroleum Revenue Management Act (PRMA), which potentially makes the occurrence of the “oil curse” in Ghana more likely. A major concern in the findings of this research shows differences in fiscal regime in Ghana relative to the regimes in the countries used for comparative purposes (i.e. the United Kingdom, Norway, Canada and Nigeria). Ghana’s oil and gas tax legislation is currently contained in different laws. This constitutes an unnecessary complication.
The research recommends that the Government of Ghana put in place adequate measures, underpinned by appropriate legislation, to enable the retention and investment of its share of oil revenues, and also deal with oil revenue volatility. The Government of Ghana should design a long-term fiscal strategy, based upon high quality, long-term economic and revenue projections, which includes a sensitivity analysis. I also recommend that watchdog entities in the oil and gas environment, such as the Public Interest and Accountability Committee (PIAC) and the Africa Centre for Energy Policy (ACEP), spearhead calls for amendments to the PRMA. These amendments should be in the areas of accounting for the oil and gas revenues, setting up safeguards for the use of the revenues accrued from the oil and gas sector, as well as adhering strictly to the priority areas determined for the allocation of the petroleum revenues. This will allow for robust provisions and safety nets to be enshrined in oil and gas taxation and revenue management laws, to safeguard the revenue inflows for development. This will also constitute a check on the Government of Ghana against increasing its spending of petroleum revenues meant to contribute to the Ghana Stabilization Fund.