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01.10.2014 Business & Finance

Giving meaning to local content; the Tullow approach

By Richard Annerquaye Abbey
Giving meaning to local content; the Tullow approach
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Kobina Egyir, 38 -- a native of the Western Region, had tremendous hopes when oil was discovered in commercial quantities about a decade ago. As one of the poorest regions, jobs are a hard find in the region, and hopes shot up on the back of oil multinationals moving to region.

Kobina, just like most of his compatriots in the Sekond-Essikado taxi rank, would have their hopes dashed when soon they discovered their Middle School Leavers Certificate was not enough to land them the jobs they had so dreamed about in the oil sector.

Several job applications had not returned even a polite response of no vacancy. The pressure to find a decent-paying job increased when Kobina's son gained admission to Senior High School. It was not long after that he had an opportunity to work for Tullow Oil as a driver.

The Tullow opportunity was made possible by the company's commitment to a strong local content policy, which had seen the oil firm engage Pergah Transport to handle its land transport logistics. Just like Kobina, many people had the opportunity of benefitting from the oil resource through the employment of strong local content policies.

Ghana's Local Content and Local Participation Law, passed in 2013, stipulates that Ghanaians should be prioritised in terms of employment in the petroleum industry, and should benefit from the country's resources. The implementation of this new law is a way of ensuring that Ghana's natural resources benefit Ghanaians, while the foreign oil companies also get fair returns on their investment.

The law seeks to “promote the maximisation of value-addition and job-creation through the use of local expertise, goods and services, business and financing in the petroleum industry value chain and their retention in the country; develop local capacities in the petroleum industry value chain through education, skills transfer and expertise development, transfer of technology and know-how and active research and development programmes; achieve the minimum local employment level and in-country spend for the provision of the goods and services in the petroleum industry value chain; increase the capability and international competitiveness of domestic businesses; and achieve and attain a degree of control for Ghanaians over development initiatives for local stakeholders”.

Although most oil companies are optimising this law, it's Tullow's execution that demands much commendation.  Tullow's main objective in fulfilling the local content law, according to its Local Content Manager, Lek Amoa-Forson, is to build the local human resource capacity and indigenous Ghananian businesses to enable them participate in Ghana's oil and gas industry.

“Tullow has voluntarily spent the last three years building its commitment in this area, and we are proud of the results we are starting to see. These include the number of indigenous companies participating in our supply chain and also the investments by Tullow Ghana and its Partners in the Jubilee Technical Training Centre and the Enterprise Development Centre for Ghanaian SMEs,” he added.

“In 2013 alone, almost half of the US$1.2billion spent with suppliers by Tullow Ghana on behalf of our partners was with Ghanaian businesses or international companies registered in Ghana [who pay their taxes in Ghana and whose workforces are majority Ghanaian].

Tullow spent US$128m with local businesses, an 86% increase on the previous year [2012: US$69m]. This represented 10% of our overall expenditure with suppliers,” Mr. Amoa-Forson noted.

One of such indigenous companies which has positioned itself to benefit from this local content law is Pergah Transport, offering various land transportation solutions. Having been engaged by Tullow Oil, Pergah has been able to give many locals like Kobina a lifeline in the country's burgeoning oil sector.

There are close to 500 people who owe their employment to Tullow via Pergah Transport. These people are mainly drivers who are located across the length and breadth of the country.

Indeed, the relationship between Tullow and Pergah is one which was won on merit by the latter's stringent adherent to international standards in the transport business.

According to Fule Badoe, Pergah's CEO, the company is in compliance with (Occupational Health and Safety Standards) OSHAS 18001 Standards and ISO 14000 EMS.

The OHSAS 18001 standard is internationally accepted as a method of assessing and auditing occupational health and safety management systems. It was developed by leading trade and international standards bodies to provide a framework for organisations to instigate proper and effective management of health and safety in the workplace.

While the ISO 14000 is a family of standards related to environmental management that exists to help organisations (a) minimise how their operations (processes, etc.) negatively affect the environment (i.e., cause adverse changes to air, water, or land); (b) comply with applicable laws, regulations, and other environmentally-oriented requirements, and (c) continually improve in the above.

“At Pergah, we feel that complying with such standards is not only beneficial to the environment that we work in, but also a sustainable manner to do business. Through our vast experience of working with foreign and companies, we have come to understand how having relevant EHS policies benefits our business,” he said.

Pergah's craving for the highest technical standards is underlined by the fact that the oil and gas sector demands the highest technical expertise, a fact Mr. Amoa-Forson concedes remains a challenge for some companies seeking to take advantage of the local content law.

“One of the biggest challenges and opportunities Tullow and our Partners face in maximising opportunities for local businesses to participate in the oil and gas sector is the fact that the industry requires deep technical expertise and significant experience, especially in off-shore infrastructure and operations,” Mr. Amoa-Forson said.

Much as Tullow is committed to developing the capacity of local companies, the onus lies on the companies themselves to shore-up their expertise. And according to Tullow, to emulate Pergah's example other local companies must among others improve their service delivery by way of higher quality output and timely delivery.

“This requires local companies to meet the international standards and regulations within which the industry operates. Being price-competitive is also beneficial,” the company said in an emailed response.

Apart from Tullow Oil, Pergah Transport has been in business with other multinationals in the extractive industry, and there's no denying the fact it remains a perfect example of a local company working magic.

In less than two years, the oil fields at the Tweneboa-Enyera-Ntomme (TEN) will begin commercial production and with it comes a lot of opportunities for local companies to exploit. But sadly, if their capacity remains a challenge, those opportunities will be served by foreigners as oil and gas companies rarely compromise on standards.

Pergah has shown the way -- indicating that when a local company strives for highest standards it can go places. With the arrival of TEN, it only makes sense that these local companies learn from the Pergah example and, who knows, Tullow's doors might be open to them.

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