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Local content law set for July

Parliament is expected to pass a Legislative Instrument (LI) that will ensure the participation of indigenes in the oil and gas sector of the economy by July.

The draft document, prepared by the Petroleum Commission (PC) in partnership with players in the oil and gas sector and other stakeholders, is currently being perused by the Attorney-General’s Department for eventual laying before Parliament for consideration and approval.

“Although the LI hasn’t come out, we have started requiring companies to submit plans that follow the sort of rigid format you have in the LI. This is just to ensure that companies have a taste of what the regime is going to be like,” Dr. Juliet Twumasi-Anokye, a consultant on local content with the Petroleum Commission, said.

“It’s not going to be just sort of falling off the cliff. We are ensuring that everyone is led gradually into the regime once it comes into effect,” she said.

Dr. Twumasi-Anokye was speaking at a breakfast meeting organised by PricewaterhouseCoopers (PwC) in Accra on the theme “Local Content in Ghana: Distant Future or Current Reality”.

“In terms of our expectation, the LI has a moratorium within which companies are required to ensure their system complies with the new provision. Currently, it is six months in the draft that is being considered for Parliament; but I can say that there is some consideration being given as to whether to actually reduce that period to a three-month period — and there is also another school of thought that rather wants it increased to one-year,” she said.

The country’s local content drive targets an ambitious 70-80 percent locally-trained management and technical staff in the oil and gas sector within 10 years of its implementation.

The plan in respect to the provision of goods and services targets 10 percent local participation from the onset, 50 percent participation in five years, and 60-90 percent within 10 years.

Though local content would lead to an increase in jobs, a big-leap local content regulation has the potential to drive up project cost and affect Government revenue. Due to the cost premiums required to meet any new regulation on local content it can also erode investment returns, some analysts have said.

Jose Retana, Assistant Director at PwC London, making a presentation on value creation in the oil sector, said the local content policy is Government’s way to maximise the benefits of oil and gas resources.

“Rather than fighting it back, companies should embrace it. They should minimise risk and maximise opportunities in the light of the impending LI. Going beyond the requirement is the way to go, not just meeting the requirements,” he said.

Mr. Retana said companies must create working partnerships with universities, communities and other relevant stakeholders.

He said Yemen, upon discovery of its oil and gas resources, established partnerships, put in place good incentive packages and worked with donors and the academic community to retain many of its indigenes who were sent abroad for training in the oil and gas sector.“Ghana also needs to put in place good incentive packages in order to retain local professionals trained in the sector,” he said.

In 2011, the Institute of Economic Affairs, which published the Petroleum Transparency and Accountability (P-TRAC) Index that scored the industry 59.6 percent, recommended the “speedy passage” of the local content and local participation policy framework for the oil and gas sector. It also urged passage of the Right to Information Bill and Maritime Pollution Bill to enhance transparency in the sector.

Source: B&FT

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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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