Trouble looms in Oil Sector

Ghana looked to defy the trends which have plagued other west African oil producers, replacing graft and waste with prudent spending, but two years after production began there is reason to worry. The country’s nascent energy sector may yet transform its economy and has thus far been unmarred by the sort of rampant corruption and mismanagement typical of Nigeria, Africa’s largest producer, whose vast oil wealth has been squandered for decades. But plans to carefully spend oil revenue on infrastructure, debt payments and agricultural development have not been well executed so far, according to a new study from the Accra-based Africa Centre for Energy Policy. “I think on the quiet we are really moving towards the way Nigeria has really spent its oil revenues. And if it goes unchecked, that is where we are going,” said Benjamin Boakye, a co-author of the report. Of the $287m in oil revenue Ghana devoted to public spending in 2012, 18% went to non-productive administrative departments like the office of the president, the report said. Meanwhile, key infrastructure projects have been short-changed, with upgrades to roads and bridges unfinished because the state failed to fully fund them, according to the think tank. Boakye said by thinly spreading oil revenue over a number of projects which cannot be completed within a reasonable period of time the government is not giving people value for money.

Ghanaian officials did not respond to requests for comment.

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