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Promoting Local (Ghanaian) Content in petroleum activities: Where is Ghana?

rog-logoThe focus of doing business in Ghana has changed since the discovery of commercially viable quantities of oil and gas in 2007. Ghana has since become more attractive to foreign investors who are seeking to acquire acreages, licences, and permits to be able to explore and develop various fields.

There is, however, the recognition that Ghana can derive better benefits through Local (or Ghanaian) Content and Participation in the sector. This means having the greater number of top management personnel of International Oil Companies (IOCs), investors, oil and gas sector service providers and contractors, and many more being Ghanaians.

Importantly, Government of Ghana has expressed the desire that the control as well as the benefits in the oil and gas discovery and production will remain with Ghanaians. This desire is however constrained by limitation in the areas of: Finance; Human resource capacity; and Technology.

It is in recognition of this that a local content and participation policy has been developed to define actions that will ensure that the constraints/challenges are resolved to enable Ghanaians take control and thus maximise the benefits to them and by the Ghanaian state.

The key policy objectives to be attained under the Local Content Platform are to:

  • Maximise the benefits of oil and gas wealth generation on a comprehensive local content platform by maximizing the use of local expertise, goods and services, job creation for people, businesses and financing in all aspects of the oil and gas industry value chain and retention of the benefit within Ghana;
  • Develop local capability in all aspects of the oil and gas value chain through education, skills and expertise development, transfer of technology and know-how and an active research and development portfolio;
  •  Achieve a degree of influence or control over development initiatives for local/domestic stakeholders;
  •  Achieve at least 90 percent local content and local participation in all aspects of oil and gas industry value chain within a decade;
  •  Increase capabilities and international competitiveness of domestic businesses and industrial sectors; and
  • Create supportive industries that will sustain economic development.

To engineer the realisation of these objectives the “Petroleum Upstream (Local Content and Local Participation in Petroleum Activities) Regulations, 2011” was passed to provide for: the development of local content and local participation in all petroleum activities; the submission of the Ghanaian content plan and related sub-plans by licensees and contractors; and the supervision, coordination, implementation and monitoring of local content.

Also at the national level, the Petroleum Commission, established in July 2011 by the Petroleum Commission Act, 2011 (Act 821) has been seen to be spearheading the enforcement of the Regulations. The Commission has taken over the registration of contractors and consultants desiring to take up opportunities of in the oil and gas sector.

There are, however, problems because the national oil company, Ghana National Petroleum Corporation (GNPC), and the Ministry of Energy and Petroleum are still seen building similar databases. Certainly, there is a need to provide clarification on the responsibility of each of these institutions.

Meanwhile, the Petroleum Commission has published a list of registration fees for local companies which desire to take up opportunities. Although, these have been described as prohibitive by various stakeholders, the fees remain in force.

In other initiatives, the GNPC has outdoored its Oil and Gas Learning Foundation aimed at developing strategies to support individual and institutional initiatives. Specifically, the Foundation is designed to build local capacity in the oil and gas industry and would award grants and scholarships to finance education and specific industry related training programmes across the oil and gas value-chain.

Government has also revealed it is collaborating with partners in the oil and gas industry to set up an enterprise development sector in the Western Region to build the capacities of the local industries, particularly, small and medium enterprises, to enable them compete effectively with their foreign counterparts.

There are certainly more initiatives but how effective can they be? How do they resolve the capacity and technical challenges that local firms face? How are these initiatives supposed to address the access to and cost of credit challenge that the private sector faces in Ghana?

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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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