Accra-Ghana, June 19, GNA – The contribution of Ghana’s upstream oil and gas sector to Gross Domestic Product (GDP) drops from 3.83 per cent in 2019 to 3.7 per cent 2020.
This is contained in the 2020 annual reports of the Ghana Extractive Industries Transparency Initiative (GHEITI), which indicated that the decline represented a 4.6 percentage drop, comparing the growth recorded in 2019.
This is the second consecutive decline after the contribution of oil and gas sector to GDP grew by 5.9 per cent and 6.4 per cent in 2018 and 2019 respectively.
The year 2020 marked 10 years of commercial oil production in Ghana, a period that has seen fluctuations in the sector’s contribution, with a 5.6 per cent contribution to GDP in 2013, which increased to 6.6 per cent in 2014 before a dip to 2.8 per cent in 2015.
There was a further decline of the sector’s contribution to GDP in 2016, where oil and gas contributed 0.5 per cent to GDP, the lowest performance of the sector, before it saw an appreciation of 3.7 per cent in 2017.
According to the GHEITI report, the decline in the growth of the oil and gas sector and its contribution to GDP was because of the impact of the COVID-19 pandemic.
In terms of revenue, a total of US$666.39 million was accrued to the State in 2020 from Royalties, Carried and Participating Interest (CAPI), Corporate Income Tax (CIT) and Surface Rentals.
Meanwhile, a total of 88,418.88 Million Standard Cubic Feet (MMscf) valued at US$606.5 of both associated gas and non-associated gas was delivered for domestic power generation, with less than two per cent for non-power gas activities.
The report recommended that the Ghana National Gas Company (GNGC) Limited and the State should expedite action on the development of the necessary gas transportation infrastructure.
That would enable early recovery of the due Make-Up-Gas (MUG) estimated at 35,630.32 MMscf as at the year ended 2020, which translates into an estimated amount of USD300 million recoverable to the State.
With respect to disclosure of taxes and revenues, the report recommended that an amendment be made to the Petroleum Revenue Management Act (PRMA) to limit the role of the Ghana Revenue Authority (GRA) in the collection of surface rental to offshore activities.
It added that such amendment should also make the Office of the Administrator of Stool Lands (OASL) manage onshore collections, while making GRA cede the amounts collected onshore to OASL for onward distribution to beneficiaries.
At the launch of the report, Dr Mohammed Amin Adam, the Minister of State at the Finance Ministry, pledged that the Government would leverage the country’s oil and gas resources and establish the linkages to boost the other sectors of the economy.
“In line with this, government and a Moroccan company, the OCP Group, have completed the front-end engineering design (FEED) for a US$1.3 billion fertilizer complex in Takoradi in the Western Region towards the production of fertilizer from Ghana’s natural gas,” he said.
“The project is expected to be completed in three years and will help increase fertilizer availability and reduce inputs costs to farmers to fast track the industrialisation of the agricultural sector,” Dr Adam added.
He said that the recent decline of oil and gas production coupled with the potential negative impact of energy transition leading to low investment in the sector called for diversification in the economy, which the government was focused on achieving.
