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Parliament approves local content regulations despite foreign opposition

oil and gas 17thParliament has, amid stiff opposition from foreign upstream oil and gas companies and their governments, endorsed the Petroleum Local Content and Local Participation Regulations, 2013 (L.1.2204).

The endorsement by the House followed a report by the parliamentary committee on subsidiary legislation,’which held that the concerns, raised by upstream companies were unfounded and that the regulations were not in contravention of the supreme law of the land — the 1992 Constitution.

The committee had held a number of meetings to consider the legislative Instrument, including concerns raised by the Ghana Exploration and Production Forum, an association of private sector upstream oil and gas companies operating in Ghana.

The forum has been opposed to the discretionary powers to determine the persons qualified to enter into a petroleum agreement or receive petroleum licence given to the Energy Minister and the Petroleum Commission under the regulations

The forum in its presentation to the committee, argued that the local content agenda is protectionist and against World Trade Organisation (WTO) agreements. It criticized regulation 48, which provides that “within three months after the commencement of these regulations, a contractor or subcontractor, licencee, or other allied entity engaged in a petroleum activity shall comply with these regulations”.

The oil companies regard this provision as a unilateral amendment of existing petroleum agreements and a breach of the 1992 Constitution, which frowns on retroactive legislation.

The forum further raised concerns with regulation 46 which provides for offences and penalties, saying that the proposed fines and sentences are a unilateral variation of the companies’ rights under existing petroleum agreements.

The subsidiary legislation committee contended, however, that none of the regulations contravene any existing law – much less the 1992 constitution – and so went ahead and asked parliament to allow the LI to come into force.

Parliamentarians accordingly approved the LI, with the Energy and Petroleum Minister Emmanuel Armah- Kofi Buah assuring the companies that the discretionary powers given to the minister will be exercised in consultation with other agencies – and not arbitrarily.

Chairman of the subsidiary legislation committee, Osei Bonsu Amoah, who read the committee’s report, said the penalties prescribed for the offences stipulated in regulation 46 do not contravene any legal or constitutional provisions.

“The rights provided under the petroleum agreements of the said companies do not guarantee their immunity from penalties for offences, such as knowingly making a false statement, connivance or fronting,” he said.

The Petroleum Local Content and Local Participation Regulations are meant to, among other things, promote the maximisation of value-addition and job-creation. in the petroleum sector through the use of local expertise, goods and services.

The regulations also provide that entities in the petroleum industry must submit their local content plans regarding the use of local goods and services, and the transfer of advanced technology and skills to the Ghana National Petroleum Corporation (GNPC) or the Petroleum Commission and Ghanaians.

Source: Basiru Adam/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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