A Former Chief Executive Officer of the Ghana National Petroleum Company (GNPC), Mr Alex Mould, says oil contribution to Ghana Gross Domestic Product (GDP) in 2020 will drop by $2.5 billion.
Government itself has projected oil contribution to revenue to reduce by nearly $600 million, but Mr Mould , who is also a Finance and Energy expert, said oil revenue excluding corporate taxes, which itself will drop from approximately US$500m to less than US$100m, will likely drop from US$1.1bn to less than US$600m by the end of 2020.
“The bad news is that government, with oil prices below $30 per barrel, will experience a drop in oil’s contribution to GDP and government revenues.
“As a result, the net revenue to the Government of Ghana will be less than $300 million after GNPC pays for its share of development costs, i.e equity financing cost.
“So, the oil contribution to the country’s GDP will drop by $2.5 billion this year and contribution to government revenue will also drop by nearly $600 million (approximately 50% of what was budgeted),” he said in an interview recently.
This, he said, will obviously result in a slow down of the economy which will severely affect government’s discretionary spending;
He adds that the impact of the slow down on the economy will be felt on many of Government’s infrastructure and capital expenditure projects like roads, which may in turn impact consumers’ costs.
The International Monetary Fund (IMF) had projected an economic growth of 6.8 percent for Ghana in 2020, the joint third highest in Sub-Saharan Africa.
Government itself in the 2020 budget projected an economic growth of 6.8 per cent, but the Governor later in press statement said the Covid-19 scourge could collapse economy to 2.5 per cent in the “worst case scenario”.
Government had initially pegged crude oil price at US$62.60 per barrel in the 2020 Budget, consistent with the PRMA (Act 815), but have later revised it downwards to $30 per barrel for this year.
The Finance Minister, Mr Ken Ofori-Atta, during his March 30th, 2020 presentation in Parliament, said this will result in a shortfall in crude oil receipts amounting to GHȼ5,679 million.
However, Mr. Mould, commenting on the implications of the recent drop oil prices for Ghana, mentioned the current slowdown on oil and gas activities, which has led to the lowest rig count lowest in 10 years and the global price fall as one of the reasons the sector’s contribution to the GPD will drop by $2.5 billion.