Local participation in Ghana’s oil industry impressive but… – Expert

An expert in local content here says participation of locals in the country’s oil and gas industry has been impressive, five years into exploration and production.

The Oil industry
The Oil industry

Dr. Juliette Twumasi-Anokye, Local Content Consultant for the Petroleum Commission (PC) of Ghana said at a workshop here, 40 kms north of the capital, Accra over the weekend.

The Oil industry
The Oil industry
Speaking on the topic, “Local content: The Role of Ghanaian Businesses in the Industry,” she observed statistics obtained by her outfit just a little over a year after the passage of the local content legislation indicates more local businesses were participating in the country’s oil business.

“Local participation is picking up. It is not picking up as fast as we want it but it is doing well. There is still room for improvement. If within 18 months, we’ve been able to push this then, I think the future is bright,” she said.

The West African country discovered oil in commercial quantities in 2007 and commenced actual production in December 2010.

The country’s Parliament passed the Local Content and Local Participation Regulation Legislative Instrument 2204 (L.I.2204) in November, 2013 which came into effect on February 19, 2014.

The law was promulgated to inter alia promote maximization of value-addition and job creation through the use of local expertise, goods and services business, financing in the petroleum industry value chain and their retention in Ghana.

The regulation gives preference to indigenous companies participating in petroleum activities with at least 5 percent equity participation of an indigenous Ghanaian company other than the Ghana National Petroleum Corporation (GNPC) in all petroleum licenses while non-indigenous companies were to enter into joint venture agreements (at least 10 percent equity participation) with an indigenous Ghanaian company in the provision of goods and services.

According to official statistics from the PC, the industry has employed approximately 7,000 people out of which 5,590 representing 80 percent are locals while expatriates accounted for 1,350 or 20 percent.

International Oil Companies (IOCs) have also employed about 3,616 out of which 2315 are Ghanaians and 1,301 being expatriates representing 64 and 36 percent respectively.

Out of the 474 companies registered by the PC to provide direct and indirect oil and gas services, 321 are indigenous, 107 foreign with 46 being joint ventures.

A total value of 6,262,757,339.85 United States Dollars (USD) contract was awarded from 2010 to the third quarter (Q3) of 2015 out of which over 1billion USD have been awarded to local companies.

As at Q3 of 2015, 201,072,785.62 USD representing 41 percent out of 792,621,122.73 USD contracts have been awarded to indigenous companies, a 28 percent increase in contracts awarded to indigenous companies in the same period in 2014.

In spite of the feat chalked by way of local participation, Dr. Twumasi-Anokye urged indigenous companies to think strategically and globally by understanding the industry which was knowledge-based.

“This is a knowledge-based industry and before you can participate, there is the need to learn and understand the industry before one can participate in it effectively, “she remarked.

Among the challenges militating against the implementation of the local content legislation the Consultant emphasized, include the low capacities of the government, regulator, the national oil company, the private as well as the educational and financial sectors.

She observed the commission has put in place a number of interventions including public education, enterprise development, human resource development as well as financial sector collaboration to bridge the gap. Enditem.

Source: Xinhua

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