The Ghana government announced that from 2008 to 2014, about $600 million worth of oil contracts have been awarded to Ghanaian companies, as the country marks the first anniversary of the Local Content law.
The Minister of Energy and Petroleum, Emmanuel Armah-Kofi Buah, who announced this at a short cocktail in Accra, over the weekend, to mark the first anniversary of the coming into effect of the Petroleum (Local Content and Local Participation) Regulations, 2014 (L.I 2204), assured that the oil and gas resources would touch all sectors of the economy.
According to him, out of the 313 companies registered with the Petroleum Commission, Ghana’s oil and gas sector regulator, 211 being the majority are indigenous Ghanaian businesses.
In terms of employment, out of about 6,600 jobs created in the industry as at December 2014, almost 4,900 (over 75%) are Ghanaians, Mr. Buah told the gathering, which was attended by mainly stakeholders in the country’s burgeoning oil and gas industry.
Even though the Local Content Regulation has encountered some implementation challenges, it has nevertheless, being hailed by industry key stakeholders as a very good instrument for creating an enabling environment for Ghanaian citizens and indigenous Ghanaian companies to thrive.
Petroleum Commission which is empowered by the Petroleum Commission Act 821, 2011 to, among other things promote Local Content and Local Participation in petroleum industry has done tremendously well in the execution of its mandate given the age of the Commission itself, its resource constraints and the short period of the existence of the Regulations.
Milestones
Taking the audience through some of the important milestones the Commission has chalked over the past one year of implementing the Legislative Instrument (L.I.), the affable Minister of Energy and Petroleum noted: “Following the enactment of the L.I 2204, the Commission began a consultative process with the industry stakeholders to identify ingenuous ways to operationalise the provisions of the LI and ensure full compliance.”
The exercise, Mr. Buah said, calmed the initial fears and apprehension of the international partners and created conducive atmosphere for effective collaboration in the implementation of the Regulations.
He, therefore, used the occasion to thank all those companies that worked with the Commission in bringing clarity to the various provisions of the LI.
Mr. Buah, who is also the Member of Parliament for Ellembele in the Western Region, added that the Petroleum Commission had developed a number of Local Content Reporting Templates, to facilitate local content monitoring and performance measurements.
These templates will make it easy for the stakeholder organizations to report on their local content performance. The Minister said he had been informed that these templates having been approved by the Local Content Committee and have also been disseminated to the partner companies for reporting.
According to him, the reporting requirements under the L.I cover both indigenous Ghanaian and foreign companies and reminded them of their obligations under the law, to promptly respond to the information request of the Commission.
The Petroleum Commission, in conjunction with the National Insurance Commission and other stakeholders in the Petroleum Upstream Industry developed a Protocol on placement of insurance in the upstream petroleum industry after an extensive consultation with the industry players.
This Protocol was in fulfillment of the provisions of Regulations 27 and 28 Petroleum (Local Content & Local Participation) Regulations 2013 (L.I 2204), and Regulations 37, 38, 53 and 54 of the Insurance Act, 2006 (Act 724).
This Protocol, according to Mr. Buah, would help to enhance the growth of the insurance market by providing the mechanism for the Oil and Service companies to retain a substantial portion of their insurance business in Ghana.
This will reduce the level of capital flights and also availed the local insurance practitioners the opportunity for human capital development in the area of Oil and Gas insurance underwriting, he stated.
Mr. Buah was quick to disclose that in accordance with the Regulation 43 the Commission was in the process of establishing a number of guidelines for the effective implementation of the Regulations.
Some of the guidelines, he mentioned as being developed include: guidelines on Joint Venture Formation; Research Development; Training & Skill Development and Upstream Procurement.
In order to develop pragmatic strategies for maximizing local content and increase in-country spend in all projects or contracts, the Commission has developed a strategy of establishing a working relationship with stakeholder organizations through an arrangement called “Ways of Working”.
Under this arrangement, the Mr. Buah intimated that Commission was able to influence the contracting strategy and the tender evaluation criteria used by various companies to ensure the maximization of local content.
Some companies have signed in to this process and discussions are ongoing with other companies to conclude similar arrangement. The basic principle of this Ways of Working is that all participating companies comply with the law and also seeks to maximize rather than minimize local content and local participation, he stated.
The Acting Chief Executive Officer of the Petroleum Commission, Theophilus Ahwireng, said through the hard work of the Commission and the government’s major oil developments, including the Tweneboa-Enyenra-Ntomme (TEN) project were ongoing, despite the drop in oil prices.
Since the discovery of oil and gas in commercial quantities in 2007 and the subsequent production in 2010, the expectations of Ghanaians as to the impact of the oil find on the national economy and their individual well-being has grown significantly.
It is an established fact that the exploration and production of petroleum resources, do not in themselves offer enough opportunities to the citizenry; what the citizens stand to benefit most from, is the provision of ancillary services to the Operators or other major players in the industry.
It, therefore, became imperative for the Government to create the enabling environment for the Ghanaian citizenry or indigenous Ghanaian companies to, where practicable, take full advantage of these services.
To this end, the Government took decisive steps to create this enabling environment for Ghanaians or indigenous Ghanaians companies to thrive. Local Content and Local Participation Policy was prepared by the Ministry of Energy and Petroleum and approved by cabinet in 2010.
The Policy outlined Government’s vision of full local participation in all aspects of the oil and gas value chain of at least 90% by 2020. The Policy also identified Finance, Human Resource capacity and Technology as major impediments to achieving this vision.
To enable the nation collectively surmount these challenges, the Government thought it wise to elevate these policy objectives into law.
The Petroleum (Local Content and Local Participation) Regulation L.I 2204 was thus birthed on November 18, 2013 and became effective just a year ago February, 18, 2014. African Eye News.com
