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Oct 27, 2011 | Business & Finance

Towards Greater Local Content: Energy Minister Summons Oil Coys

By J. Ato Kobbie, Managing Editor

Service providers in Ghana's oil and gas sector have been summoned to a stakeholders meeting on 9th November this year, to reason towards increasing Ghanaian content and participation in the oil and gas sector, in line with Government policy.

Confirming news of the impending meeting to The Business Analyst in Accra on Tuesday, Deputy Minister of Energy in charge of Petroleum, Hon. Emmanuel Armah-Kofi Buah, says this is the first step towards working with stakeholders in the sector to understand that this is of critical importance to government.

“It's a priority and we'll be checking on each company to see that they have well thought-out programmes to ensure that ultimately the people of Ghana are participating actively in this oil and gas sector,” he assured, adding: “that is really going to be the focus.”

“President John Evans Atta Mills has said that the oil and gas find must be a blessing and not a curse and this must be so in a lot of ways and the critical area of making sure that the people of Ghana participate in this industry also comes into play,” he noted.

The invitation comes amidst reports of Ghanaians being sidelined in recruitment by service providers in the sector, to the benefit of other nationals, while consultations over a legislation to give legal backing to a local content policy already approved by Cabinet continues.

“We are getting a lot of complaints from various stakeholders, especially, from the Rig Workers' Association, of companies not living up to expectations with the way they are employing Ghanaians; the way they are not focusing on training programmes to make sure Ghanaians participate fully; the way to open up opportunities for Ghanaians who want to set up companies in this industry,” a worried Mr. Buah stated.

Some of the 26 service companies that have been invited to the meeting are Seaweld Engineering Ghana Limited, Menergy International Ghana Ltd, MEA Catering Services Ltd., Transocean Offshore International Ltd, Ghana, Schlumberger Technical Services Inc, Oceaneering International Services Ltd and MODEC Ghana Ltd.

The local content policy was carved in recognition of the limited capacity of the local people to participate in the Oil and Gas sector in the areas of technology, finance and human resources for which reason “the involvement of expatriates in some specific areas would be necessary.”

Section 5.1 of the policy document, sub-titled Mandatory Local Content in Oil and Gas Development, requires that 'All operators, contractors, sub-contractors and any other entities involved in any project, operations, activity or transaction in Ghana's Oil and Gas Industry shall incorporate local content as an important element in their project development and management philosophy for project execution. Every project, operation, activity or transaction must have or form part of a Local Content Plan. Such a Plan shall include all aspects of the Local Content framework discussed in this document and shall be assessed and revised at regular intervals, as appropriate.”

The policy, which has since been approved by Cabinet, seeks to holistically empower Ghanaians through their progressive involvement in the oil and gas sector.

The policy therefore identifies stakeholders and their roles, the urgent need for capacity building and training, technology transfer and its indigenization; infrastructural development; creation of a conducive and thriving environment for optimum local participation; and integration of the Oil and Gas sector into the long term national development plan.

The policy was formulated after a nation-wide consultation and recognizes the potential for accelerated development that a well-managed oil economy can give as well as the socio-political unrests that perceived or real inequitable distribution of the benefits of the resource brings, especially as it is a non-renewable resource.

Local content refers to the quantum/percentage of locally produced materials, personnel, financing, goods and services rendered to the oil industry and which can be measured in monetary terms.

Local Participation, however, refers to the level of Ghanaian Equity Ownership.

Under the policy, oil companies are required to achieve “at least 90 percent local employment and in-country spend in the oil and gas industry value chain within a decade of the start of every petroleum license or contract, in the provision of such supplies and services that are determined by the LCC to be of high priority to Ghana.”

Licenced companies are required to also “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”.

Additionally, the policy seeks to Maximize the“value-addition and job creation, through the use of local expertise, goods and services, businesses and financing in the oil and gas industry value chain and the retention of benefits within Ghana.”

Capacity building for international competitiveness of domestic businesses and industrial sectors is also required of these companies.

According to the policy document, “In order to ensure increased financial benefits to Ghanaians, and the Ghanaian state, all operators in the oil and gas industry, shall as far as practicable use goods and services produced or provided in Ghana for their operations in preference to foreign goods and services. The Operators shall give priority to the purchase from citizens of Ghana, local products and services that are competitive in terms of price, quality and timely availability. A preference for Ghanaian entities, even if they are more expensive is mandated, all else being equal. The World Bank domestic preference percentage or 10 percent price increment will be used as the preference ceiling, whichever is greater.

“Standards and certification applied to the provision of goods and services shall be in accordance with guidelines of the Ghana Standards Board.”

Again, it requires that “Where bids are being evaluated, and where bids are otherwise equal, the bid containing the highest level of local content shall be selected.”

On the status of the legislation that would give legal backing to the Local Content Policy, Mr. Buah said the draft has been forwarded to the various agencies in the ministries for their inputs.

“We are going to engage the people of Ghana on this draft to make sure that we have really listened to all stakeholders, including the oil and service companies, so that at the end of the day, we are going to have a progressive local content policy that ensures that the people of Ghana win in this industry,” Mr. Buah stressed with reference to the draft legislation that is to give backing to the local content policy. [email protected]

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