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Low financial support affecting local firms in petroleum sector—ACEP

  • SOURCE: Citi | Citi FM
    • POSTED ON: February 7, 2019
    • CATEGORY:

    The Africa Centre for Energy Policy (ACEP) has reiterated calls for improved financial support for local companies in the petroleum sector to enable Ghanaians undertake opportunities in that sector.

    As at September 2018, there were about 600 indigenous Ghanaian companies participating in the upstream petroleum industry with a total fund of $799 million dollars’ worth of contracts awarded to them, —Energy Minister John Peter Amewu recently revealed.

    But speaking to Citi Business News on the matter, the Executive Director of ACEP Ben Boakye said even though progress has been made with local participation in the petroleum industry, Ghanaians will continue to be left out on big ticket transactions if the issue of capital is not addressed.

    “I think as far as local content is concerned as a country, we have made some progress. We have indigenous companies participating across the entire value chain. But still some challenges remain,” he said.

    He argued that getting enough capital to adequately participate in the sector is virtually none existent.

    “You have companies struggling to take up the bigger opportunities that are in the sector, so government may want to pay attention to how we can help local businesses raise capital to be able to compete at the level of the most valuable contracts that comes in”.

    “If you want to give a $100 million contract for example in the oil sector to a Ghanaian you will struggle to find one. And that is where the money really is,” he added.

    Mr. Boakye observed that despite the benefits of the recent recapitalization exercise, banks still have a long way to go to finance top transactions in the oil sector.

    “If the capitalization of a bank is about a $100 million dollars, that alone can be absorbed in a single transaction in the oil industry. So will the banks make that money available to one contractor?. No”, he stressed.

    He maintained that “you may need to have the banks really working together to syndicate on some of those transactions to be able to help support local businesses take up the opportunities”.

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