Legislative instrument (LI), which spells out regulations and give legal backing and enforceability to the local content provisions of the country’s local content and participation policy framework on the petroleum sector, was laid before Parliament on Monday, 1st October, 2012.
Titled ‘PETROLEUM (LOCAL CONTENT AND LOCAL PARTICIPATION) REGULA-TIONS, 2012, the regulations, derived from the Petroleum Commission Act, 2011, Act 821, will come into force after Parliament has scrutinized, fine-tuned and passed it during its session mat commences 16th October, 2012.
Giving a background to the LI before Parliament on Monday, Hon. Emmanuel Armah-Kofl Buah, Deputy Minister of Energy (Petroleum) said in order to ensure that Ghanaians benefitted as much as possible from the oil find, Cabinet approved a local content policy in 2010 “to be the platform for achieving the goals of the oil and gas sector with active participation by Ghanaian citizens in all roles, at all levels and in all activities relating to the oil and gas value chain.”
The local content legislative instrument has been carved out of the local content policy framework and its purpose is to provide for the development of local content in Ghana and also act as a mechanism for the coordination, monitoring and governance of Ghanaian content.
“Madam Speaker, the local content regulations are designed to ensure extensive use of local goods and services as a means of achieving the local content objective, including the rapid development of Ghanaians needed to fully reap the benefits of the industry,” Hon. Buah told the House. He said, among other things, that “the regulations require each licensee, contractor or subcontractor to submit a local content plan to the Petroleum Commission for approval prior to the start of their activities.”
The local content plan will also consist of various sub-plans including: Employment and Training Sub-plan; Research and Development sub plan; Procurement sub-plan and Technology transfer sub-plan, among others.
“Madam Speaker, our existing PNDC Law 84 and petroleum agreements already have provisions for local content development, however, this local content legislative instrument seeks to strengthen those provisions by ensuring effective monitoring of measurable targets and thereby enhancing local content implementation as a whole,” he staffed in apparent reference to provisions derived from Section 23 (10), (12) and (13) of PNDC Law 84.
Section 23(10- 1 3) of the Petroleum Exploration and Production Law, 1 984 PNDC Law 84, reads: (10) A contractor or sub-contractor shall, in accordance with the Regulations and with the terms of a petroleum agreement or petroleum sub-contract, as the case may be, ensure that opportunities are given as far as is possible for the employment of Ghanaians having the requisite expertise or qualifications in the various levels of the operations.
(11) A contractor or sub-contractor shall not engage in discriminatory practices on grounds of race, nationality or sex in the conditions of service provided for personnel.
(12) A contractor or sub-contractor shall, as far as practicable, in accordance with the Regulations and the petroleum agreement or sub-contract use goods and services produced or provided in Ghana for his operations in preference to foreign goods and services.
(13) A contractor or sub-contractor shall, in consultation with the Corporation, prepare and implement, in accordance with the Regulations and in accordance with the terms of any such petroleum agreement or petroleum sub-contract, plans and programmes for training Ghanaians in all job classifications and in all aspects of petroleum operations.
Once laid, Parliament is expected to scrutinize the Bill, which is expected to become a working document to promote local participation in the country’s oil and gas industry.
The Bill makes provision for the setting up of a Local Content Committee under the Petroleum Commission, to which local content plans will be submitted for approval. The Committee is expected to oversee, coordinate and manage the development of local content as well as prepare guidelines to include targets and formats for local content plans and reporting.
The Committee will also be expected to make appropriate recommendations to the commission for the smooth implementation of these Regulations while setting minimum standard requirements for local content in local content plans where applicable, among others. The Bill also sets Local Content levels to be attained from the date of effectiveness of license or petroleum agreement. For Goods and Services, the policy sets out a 10% level on start, 50% after five years and 90% after 10 years.
Under Recruitment and Training, the bill has set out 50% for management staff, 30% for Technical core staff and 100% for other staff on start, progressing to 80% for management staff, 80% for technical core staff and 100% for other staff in five years. In 10 years, the Bill sets out a target of 90% for management staff, 90% for technical core staff and 100% for other staff. It proposes, under the section “Interest of a citizen in petroleum operations”, that “An indigenous Ghanaian company shall be given first preference in the grant of a petroleum agreement or a license with respect to petroleum activities subject to the fulfillment of the conditions specified in these Regulations”.
It said unless otherwise approved by the Minister, there shall be at least a five percent equity of an indigenous Ghanaian company other than the Corporation to be qualified to enter into a petroleum agreement or a petroleum license.
Other sections state that for the purposes of the above, the Minister shall determine the persons qualified, adding that the interest of an indigenous Ghanaian company arising from a petroleum agreement or a petroleum license is not transferable to a non-indigenous Ghanaian company.
Another section states that “a non-indigenous Ghanaian company which intends to provide goods or services to a contractor, a subcontractor, license, the Corporation or other allied entity within the country and afford that Ghanaian company an equity participation of at least ten percent”.
Ministry of Energy