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Ensuring local content in oil, gas industry

In his policy statement delivered a few weeks ago.President Mahama reiterated the government’s position in promoting Ghanaian economy.

This policy, referred to as local content or local participation policy is very significant because in the past, successive governments failed to promote a technology and knowledge transfer policy for foreign investments in Ghana.

The issues of local content and participation have recently gained prominence internationally and are a major feature of policy initiatives in both developed and developing countries.

The question is, what value can such a policy intervention have for the Ghanaian economy?

Local content and participation policy is based on maximizing the depth and breadth of local ownership, control and financing. This should be the case in order to increase local value-capture from all parts of the value chain created from the resource of the country.

President Mahama makes the case that: “Another major thrust of our policy in respect of the oil and gas industry is ensuring integration into our national economy. This is why local content, including local job creation, is critical for us. We are going to hold companies to compliance with provisions in the agreements they have entered into that require them to employ Ghanaians to the maximum extent possible in all aspects of their operations. Let me be quite blunt that we will not sit back and have qualified Ghanaian unemployed while companies bring in expatriates to fill positions that Ghanaians are perfectly capable of occupying”

The statement above is refreshing and welcome news because often, Ghanaian authorities sit back and allow foreign companies to bring in expatriate staff and material for their operations at the expense of Ghanaians. Their investment in the country make no provision for technology and knowledge transfer, thus continuing with the dependency syndrome.

The policy is also intended at maximizing the level of usage of local goods and services, expertise, businesses and financing. Local content or local participation creates the opportunity for local value-addition   and this is achieved in terms of ownership, control and financing by Ghanaians.

In our quest to achieve a developed nation status, the policy has to give preference, firstly to locally owned, controlled and financed enterprises, then to those that demonstrate clear culture, commitment, participation and capability developments. This should be consistent with the country’s aspirations and vision; focusing on improving local skills, business know-how, technology, financing, capital market development, and wealth capture and distribution.

“the Government of Ghana is committed to deploying an effectively local content and local participation policy as the platforms for achieving the goals for the oil and gas sector with full local participation in all aspects of the oil and gas value chain of at least 90%by 2020” the Ghana local content policy document states.

The policy strand of the government sharply contrasts earlier investment climates that never protected local enterprises. Our policies in the past (especially those we signed –up to) were strangulating the economic growth of the country. The Economic Partnership Agreement, as initialed in December 2007, greatly affected the local industry, which could not compete with the heavily subsidized and supported European companies.

The era of technology and knowledge transfer is here with us. Ghana is part of the global market and therefore must leverage its potential to the benefit of its citizen and the world at large. As the fastest growing economy the country needs a vast wealth of know-how for the manufacturing, production and service sectors.

This policy must be extended to all sectors of the economy and not restricted to the oil and gas sectors alone. The commitment of the government is commendable and must be welcomed by all the stakeholders of the economy.

President Mahama could not have put it any better than: “ there already are provisions in our law and in a he agreements with our partners for preference to be give to local goods and services in the procurement of what is needed for the oil and gas operations being undertaken in Ghana”

In this current climate of protectionism by development partners and satellite partners alike, Ghana cannot waste any more time on dependent foreign investments that will not add-value to local industry participations.

Let’s protect our local industry to enable it compete favourably in the global stage; the president has set the tone. Let the business community add its voice to his call. Trinidad &Tobago has succeeded in implementing this policy and its yielding maximum dividend for the Caribbean Island nation.

Daily Graphic

 

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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