sharing in governance of extractive industries

Forecasting Ghana's Oil Revenues for the 2015 Budget Using an Open Fiscal Model of the Jubilee Field

In order to help Ghanaian MPs and the general public understand the potential impact of volatile petroleum prices on the implementation of the 2015 budget, we at NRGI have built an oil revenue forecasting model. The tool uses only publicly available data and information. It is provided in Microsoft Excel (.xlsx), and released under an open licence so that it can be used by anyone. It can also be edited ,refined, and updated as events in Ghana and the world evolve.

This modeling was only made possible due to the advanced state of oil sector disclosures in Ghana: contracts for the most important producing oil field (the Jubilee oil field) are published, the country is EITI compliant, national laws require transparency and regular reporting, and international oil companies such as Tullow and Kosmos disclose further key information.

With a publicly available model, engaged citizens can calculate the impact of different price scenarios on Ghana’s 2015 budget. We have presented our findings at budget review hearings and to the Public Interest and Accountability Committee, an institution created by revenue management legislation to publicly monitor implementation of the law. And we will continue to engage with stakeholders to support effective planning and oversight of the budget throughout 2015.

The open model not only helps individuals understand the effects of petroleum revenues on the budget, but it also clarifies the dynamics of taxation from the Jubilee oil project, including petroleum contract implementation by the oil companies in the joint venture. If the model exposes a large shortfall in a particular revenue stream, that would flag the need for further investigation of revenues, costs and tax levies.

Despite our best efforts, this model still comes with important limitations compared to those of government authorities, oil companies and international financial institutions like the IMF and the World Bank, which have access to proprietary or privileged information. Although we are confident that our model captures magnitudes and trends with a reasonable degree of accuracy, it may be less precise because it is based solely on public information.

We also hope that the model will provide grounds for collaborative work and learning. We will henceforth continue working with stakeholders in Ghana to refine the model and encourage disclosure of additional open data. No model is perfect, and we welcome feedback from users.

Download the model       Download the guide      NRGI page on the model     Analysis on 2015 budget

Please be in touch with us at sbekoe@resourcegovernance.org (Samuel Osei Bekoe) and dmihalyi@resourcegovernance.org (David Mihalyi).

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Comment by Jenkins Flahwor on March 5, 2015 at 3:03

Hi David, thank you very much for this piece of work. I have got particular interest in it and thinking of the possibility of replicating it in my country, Liberia. As a matter of fact, I am about completing my studies in mineral and energy economics at Curtin University here in Australia. I have learnt a lot about similar modeling and have come to realize that it is a major tool used by companies and investors in decision making about their investments. To a large extent, I think it tends to place the investors in a better position than governments since they subject these models to various rigorous scenarios and sensitivity analysis which give them a clearer picture of what the future would look like given economic parameters. 

I would appreciate further collaboration in this regard, particularly of the possibility of engaging in similar venture for Liberia. I will be completing my studies in 3months time and returning to Liberia right after. My contact is Email: jenkinss.flahwor@postgrad.curtin.edu.au, Tel: +61469860833.



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