January 26, 2010 / 1:36 PM / in 8 years

Ghana eyes sovereign wealth fund for oil money

ACCRA (Reuters) - Ghana is considering setting up a sovereign wealth fund to channel surplus revenues from oil production, which are due to start rolling in later this year, Finance Minister Kwabena Duffuor told Reuters.

<p>Tema oil refinery near Ghana's capital Accra March 28, 2005. REUTERS/Yaw Bibini</p>

Ghana is the latest African state, alongside Nigeria, Angola and Tunisia, to study ways to ringfence energy windfalls for future generations.

“We have held a couple of meetings already ... it’s something we’re seriously working towards and we hope to put the proposals before cabinet in about a month,” Duffuor said in an interview.

The West African nation, which is the world’s No. 2 cocoa producer and Africa’s second-biggest gold miner after South Africa, expects to start oil production late this year when its offshore Jubilee energy field starts operation.

Income from oil production could reach $2 billion a year although proposals for a wealth fund could face resistance from critics who argue the money is needed now for spending priorities, a government source said.

If the cabinet backs the proposals, a bill would then be drafted for consideration by parliament, Duffuor said.

He gave no details of the size of the possible fund. But a Ghanaian government source close to discussions on the matter said it would be largely shaped by the size of oil revenues.

“Although it is not conclusive, it (annual oil revenue potential) is estimated to have an upside of around $2 billion when production ramps up,” said the source, who declined to be named because of the sensitivity of discussions.

The source noted that it was not certain that the fund would be given the green light, noting an alternative option -- investing in key domestic infrastructure projects -- was also under discussion.

Ghana is targeting the last quarter of 2010 to begin pumping oil from its Jubilee field, which is estimated to hold up to 1.8 billion barrels of oil. Output is seen rising to as much as 150,000 barrels a day within months of the start-up.

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