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DECEMBER 14, 2016
Oil prices have surged after oil producing countries that are not Opec members agreed to cut output.

Brent crude jumped to $57.89 a barrel – the highest since July 2015 – before falling back to $56.55, although that was still a gain of 4.1% on the day.

On Saturday, non-Opec countries agreed to cut their output by 558,000 barrels a day in a deal designed to reduce oversupply and boost prices.

Opec announced last month that it would be cutting its own production.

The Organization of Petroleum Exporting Countries (Opec) committed to halting the supply of 1.2 million barrels a day, starting from January.

The new deal is the first global pact in 15 years.

“We have seen Opec and non-Opec producers agreeing, which is boosting reflation expectations around the world,” said Chris Weston, an institutional dealer with IG Markets.

Saudi Arabia has also signalled it could cut its output more than first suggested – something that could further lift prices.

But some expressed doubts about the deal’s long-term chances of success.
At the edges

Thomas Moore, investment director at Standard Life Investments, told BBC Radio 5 live: “You will see the oil price jump this morning – that’s understandable – but I think you need to put it in context.

“This is a cut of 550,000 barrels a day, and of course we have had about a million off Opec’s production.

“But if you think about overall world production, Opec’s producing 33 million barrels per day, so those numbers of 1.5 million are good, but they are not that good.

“And Opec accounts for only about 40% of world crude production, so yes, there’s a day-one impact, but I think it’s at the edges here.”

Those taking part in Saturday’s deal included Russia – which will provide the lion’s share of the cut – as well as Mexico and Bahrain among others.

It comes after more than two years of depressed oil prices, which have more than halved since 2014 due to a supply glut on the market.


DECEMBER 5, 2016



Mr. Seth Terkper, the Minister of Finance says in 2013, government spent a whopping $2.6 billion to import finished petroleum products from Europe for local consumption.

The Minister, noted that the country needs stronger indigenous oil marketing companies (OMCs) to propel the economy.

“With a growing Oil and Gas economy, vibrant indigenous OMCs are what we require to make our local content policy succeed.  Ultimately, a stronger and financially solvent indigenous OMC is good for a stronger cedi.

“As we embrace competition, it is important indigenous OMCs up their game and strengthen their capital base, so that they can rub shoulders with other multinationals and also be players in sectors such as the bunkering, which demands huge financial commitment,” Mr Terkper stated at GOIL end-of-year award and dinner in Accra.

The Finance Minister noted that GOIL continue to play crucial role in stabilizing the once turbulent petroleum marketing sector.  Indeed, the performance of indigenous companies like GOIL has vindicated government’s decision to de-regulate the sector in July 2015.

“I would like to recall that when government took that decision, some in the industry were concerned that a liberalized environment will result in increased prices, which will not be beneficial for the consumer.

“The other concern was the thought that government will lose control of this critical sector,” he said.

Mr. Terkper however noted that, the deregulation of the petroleum downstream sector has had a positive impact on government’s finances and has cushioned the country tremendously, the shocks associated with crude price volatility on the international market.

“For instance in 2013, Government spent a whopping $2.6 billion to import finished petroleum products from Europe for local consumption.  After deregulation, data from the National Petroleum Authority (NPA) indicates that the Bulk Oil Distribution Companies (BDCs) accounted for 74 per cent of the imports, while government institutions imported the remaining 26 per cent.

“Clearly a huge financial burden was removed from government after deregulation.

“Let me emphasize that, it is in pricing that the effects of deregulation has greatly impacted on the consumer.

“No doubt, government’s decision to de-regulate the petroleum downstream sector has brought about stiff competition and compelled players in the sector to reduce their prices which have eventually benefitted the consumer,” the Finance Minister noted.

Speaking on the topic; “The relevance of indigenous OMC in the de-regulated petroleum downstream industry in Ghana,” Mr. Terkper said indigenous OMCs have a stabilizing role to play.

“Let me also put on record the important role GOIL has played in stabilizing the market and helping the consumer to get fairer fuel prices on the market,” he said.

He however noted that other indigenous OMCs can only play that role if some of them can consolidate and muster the financial muscle.

Professor William Asumaning, GOIL Board Chairman, noted that GOIL continued to focus on growing its core business through value-added joint venture engagements, take-over of distressed competitor stations and acquisition of new stations.

He said despite the challenging market conditions and stiff competition, the Company achieved the biggest market share among the over 80 Oil Marketing Companies.

GOIL’s fuel sales during the year 2015 exceeded its own target and remains on course in the retail business through competitive pricing, offering quality additivated products, value for fuel purchased by our cherished customers and maintaining a high level of visibility by the strategic spread of its stations.

Prof Asumaning said in June 2015, when the other Bulk Distribution Companies (BDCs) were finding it difficult to import finished petroleum products into the country, BOST together with GOENERGY (a subsidiary of GOIL) rose up to save the situation.

“As a result, the country did not experience any significant fuel shortage. Once again, GOENERGY’S contribution to the implementation of the deregulation exercise in the country is a success story we can all share,” he said.

He said the synergy between GOIL and GOENERGY has pushed the Company as a group to grow to a level we are all proud of.

Prof Asumaning therefore commended GOIL Board, Management, staff, Filling Station attendants, customers, the media and other stakeholders including Banks for supporting GOIL.

Mr Patrick Akpe Kwame Akorli, Group Chief Executive Officer of GOIL, received award for over 20 years dedicated service to GOIL in several subordinated positions.

Mr Akorli has worked through the ranks to his current position as the Group CEO and Managing Director.

Other staffs who have worked between ten and 35 years of service were also awarded.


NOVEMBER 28, 2016


Government’s consistent lowering of the cap on the Ghana Stabilisation Fund (GSF) could ultimately defeat the purpose for which the Fund was set up, with monies in the Fund expected to reach an all-time low this year.

Cap on the fund was initially reduced from US$250 million to US$150 million and then reduced to US$100 million, according to the Finance Minister earlier this year in his 2015 supplementary budget estimates.

The continued depletion of the Stabilization Fund, whose closing book value at the end of 2015 was just US$177.4 million, some analysts say, weakens its capacity to help sustain critical public expenditure especially in times of lower than expected oil prices.

The Stabilisation Fund, which was established under the Petroleum Revenue Management Act (Act 815), was to provide budgetary support in times of shortfalls in expected petroleum revenues, but the Act was later amended to allow excess monies in the fund, ie beyond US$150 million, to be moved into a sinking fund for debts repayment purposes.

The Fund had a balance of US$379.19 million in 2014 when the Finance Ministry announced a cap of US$250 million, which allowed the excess amount to be channeled into a contingency fund to allow for debt servicing.

A year later even as petroleum revenues fell, the Finance Minister lowered the cap on the fund to US$150 million, and transferred the excess to the Sinking Fund to be used for debt servicing.

For the third year running, the Finance Ministry, in the 2016 mid-year budget review, announced a reduction of the cap to US$100 million which would mean that the excess would be transferred to the sinking fund for debt servicing again.

Government will thus move an amount in excess of US$74 million into the sinking fund, as its bid to raise another Eurobond this year has been met with demands by investors for excessive yields.

Oil revenue since inception

Since Ghana began the commercial production of oil in 2011, a total of US$3.3billion dollars has been realised. The Petroleum Revenue Management Act (Act 815) stipulates how the oil revenue should be distributed. Based on the Act, transfers were made to the Ghana National Petroleum Corporation (GNPC), to the Annual Budget Funding Amount (ABFA) and the Ghana Petroleum Funds.

Over the last five years, GNPC has had a total of US$959 million, representing 30 percent of all revenue received from oil. The ABFA, which is the share of the oil revenue used to support the budget, it has received a total of US$1.4 billion, representing 43 percent of all oil revenues.

The Ghana Petroleum Funds, which comprise of the Stabilisation Fund and the Heritage Fund, together received US$874 million, representing 27 percent of all oil revenue since inception.

By :Richard Annerquaye Abbey

DECEMBER 2, 2016



The Tema Oil Refinery (TOR) has signed an agreement with three companies to revamp its Crude Distillation Unit (CDU) and increase the facility’s production capacity.

The $40-million project is expected to increase the refinery’s production capacity from 45,000 barrels per stream day (bpsd) to 60,000 bpsd on completion.

It will be funded from TOR’s internally generated funds.

Although TOR has a production capacity of 45,000 bpsd, it is currently producing 28,000 bpsd as a result of the breakdown of one of its furnaces at the CDU four years ago.

The signing of the agreement has, therefore, paved the way for the three companies — Osun Engineering, a South Korean firm, and its partners, Intertek Ghana Limited and TG Enterprises Company Limited — to carry out a technical evaluation of the facility next month and redesign the current structure to a 60,000bpsd capacity production unit.

Expansion of facilities

The General Manager in charge of Technical Services at TOR, Mr Samuel Yeboah Adomako, told the Daily Graphic in Tema yesterday that the refinery was seeking to expand its facilities to meet the national consumption of 85,000 barrels per day.

“Our projection is to reduce the importation margin of finished petroleum products, improve profitability and further reduce pressure on our local currency. This is one of the major reasons the refinery must work consistently,” he added.

The refinery currently supplies about 50 per cent of petroleum products on the Ghanaian market.

According to Mr Adomako, with the present development, a future minimal upgrade of facilities would enable the refinery to produce at the 85,000 bpsd capacity to meet the national demand.

He noted that refineries all over the world operated on economies of scale, hence the bigger the production unit, the higher the revenue a country was able to generate.

New facility

Mr Adomako said feasibility studies had been conducted to build a new refinery, adding that  the facility would be an export-oriented refinery and that private sector participation would be encouraged.

The TOR tumbled to a sorry state in 2009 from huge debts but a management re-engineering has seen it bounce back.


NOVEMBER 28, 2016

fishing 2

Growth in the agriculture sector has failed to mirror annual allocations of oil revenues to the sector, raising concerns over the ability of oil proceeds to lift the farming business from its dwindling fortunes.

A Graphic Business trend analysis between 2011 and 2015 showed that while allocations from the Annual Budget Funding Amount (ABFA) to the sector rose by 354.2 per cent, growth in the sector averaged 3.2 per cent within the five-year period.

Between 2011 and 2012, when ABFA allocations to the sector rose from GH¢13.1 million to GH¢72.5 million, growth in agriculture also rose from 0.8 per cent to 2.3 per cent.
Annual growth, however, took a nosedive from 2013, dropping from 5.7 per cent to 4.6 per cent in 2014 before easing further to 2.5 per cent last year. The declining growth was in spite of increased disbursements of ABFA to the sector.

Within the period, a total of GH¢329.4 million was disbursed to the sector. In 2011, the sector received GH¢13.1 million, 2012 allocation increased to GH¢72.5 million, and decreased to GH¢13.6 million in 2013. Allocations shot up to GH¢170.6 million in 2014 and then decreased to GH¢59.5 million in 2015.

Percentage share of GDP

In terms of contribution to total output measured by Gross Domestic Product (GDP), the agric sector has lost its leading position to the services sector.

The sector’s contribution was 25.3 per cent in 2011 but slumped to 22.9 per cent in 2012. It further dropped to 22.4 per cent before inching to 22 per cent in 2015.

Usage of sector allocations

Allocations to the agriculture sector were spent on a number of projects between 2011 and 2015. Of the amount, GH¢64.8 million was used to fund the government’s fertiliser subsidy programme, with GH¢16.3 million going into the construction dams for irrigation purposes.

Some GH¢18.1 million was also used to rehabilitate aged dams. Another GH¢1.6 million was used to support the development of various fisheries infrastructure throughout the country.
Beyond that, an extra GH¢1.8 million of the sector’s share of oil proceeds was used as counterpart funding for various agriculture-related projects. Another GH¢199.4 million was also used to finance government projects, goods and services and investments captured under the agricultural sub-sector under the ABFA.

Some of the unclassified projects that appeared sparsely in the spending pattern were categorised as support for national programmes or projects, agriculture goods and services, agriculture investments, agriculture modernisation, among others.

Fisheries get big

Out of the GH¢329.4 million that went into the agricultural sector, about 40 per cent of it was used to support various interventions in the fisheries sub-sector within the five-year period.

So far, GH¢120.1 million out of the total allocation of GH¢329.4 million has been spent on rehabilitation of irrigation infrastructure, part payments for sea defence projects in fishing communities, payment for the rehabilitation of a laboratory at Tema and the construction of a Fisheries College.

Growth in this sub-sector has been volatile, recording positive and negative growth through the five-year period. It recorded a -8.7 growth in 2011, bounced back to a positive growth of 9.1 in 2012. Growth dipped further to 5.7 per cent in 2013 then to -5.6 per cent in 2014. The growth rate in the sub-sector is currently 1.3 per cent.

Impact not automatic 

An Economist and Senior Lecturer at the University of Cape Coast (UCC), Dr John Gatsi, said in an interview that investments that were done in the sector would impact positively on growth.

Citing the fisheries infrastructure as an example, he said the Fisheries College that was being built from oil revenues would train people who will then apply the knowledge acquired to help boost fishing in the country.

“The focus of the ABFA in the agriculture sector is to develop the infrastructure. Those items have a period within which they will be completed and it will then begin to have development impacts,” he said.

Dr Gatsi also explained that it was important for people to manage their expectations on how the ABFA could transform the sector, given that investments in agriculture did not necessarily promote growth.

This, he said, is due to the fact that growth in agriculture, as is the case with the other sectors, occurs as a result of numerous factors, one of which is investments.

By: Jessica Acheampong


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