Ghana gains despite sharp drop in crude oil prices-NRGI

The Natural Resource Governance Institute (NRGI) has stated that Ghana gained from the drop in oil prices on the world market despite a significant decrease in revenue accrued from export of the commodity.
In 2015, government reviewed its projected oil revenue from 4.2 billion dollars to 1.5 billion dollars, indicating a 64 percent decrease after oil prices dropped to record low level below 50 dollars per barrel.
Currently, crude oil is pegged at 46.7 dollars a barrel while brent crude is at 47.8 dollars per barrel, all below government’s bench mark projection of 53.05 dollars per barrel in the 2016 budget.

Earlier this year, Finance Minister Seth Terkper hinted of a return to cabinet to review downwards the country’s targets for 2016.
But speaking to Citi Business News, the Deputy Director , Africa, of the Natural Resource Governance Institute, Emmanuel Kuyelu maintained that the institute’s calculation so far indicates that Ghana is currently a net importer ,hence has benefited from the continues drop.
“There has been sharp drop close to 70 percent. It’s a major drop in terms of petroleum revenue but at the same time it’s very important to recognize that a country like Ghana given the quantity of oil produced at the moment, we are actually a net importer,” he said.

He explained that with current oil production from the jubilee field, Ghana imports more than it exports, making the country benefit from importation of petroleum products.
“This means that if prices are dropping, even though it may affect your revenue margin, the import bill will be quite positive which will be a gain,” he added.

He was of the view that due to the deregulation and the increase of BDCs, assessment could be made on the agencies that also benefited directly from the drop.
“We have to also keep in mind that though on the export side the revenue came to government directly, on the import side it is done by the BDCs and government only benefits from that side only through taxes”
He maintained that going forward; government must carefully peruse its projections not to over rely on expected proceeds from the commodity since volatility on the world market could diminish actual returns from the commodity.
Analysis of oil revenue

In 2015, Ghana recorded a $1.1 billion drop in the petroleum products import bill and earned $429.4 million on exports.
The country imported over 3.7 million (3,708,904.815) metric tonnes of petroleum products at a cost of over $1.9 billion in 2015, compared to 3,678,049.650 metric tonnes at a cost of $3 billion ($3,045,579,675.59) in 2015.
This means that even though the country imported 30,855.165 metric tonnes more in 2015 than in 2014, the import bill dropped by over $1.1 billion ($1,140,774,743.01) due to the drastic fall in the price of crude oil on the world market.