Local content regulations becomes operational by the end of October

By the end of October the much awaited Local Content Legislative Instrument, which is to provide for the development of local content in Ghana and also act as a mechanism for the coordination, monitoring and governance of Ghanaian content matures into law. This was made possible when the Deputy Energy Minister, Hon Emmanuel Kofi Buah, laid the regulations before parliament by way of a Legislative Instrument (LI) which was derived from the Petroleum Exploration and Production Law, PNDC Law 84. By law, the LI matures and becomes enforceable 21 days after being laid before parliament. The LI spells out regulations and gives legal backing and enforceability to the local content aspirations of Ghana in its local content and participation policy framework in the oil and gas industry. The purpose of this law is to strengthen the local content provisions in the Exploration and Production law, PNDC law 84 and existing petroleum agreements by ensuring effective monitoring of measurable targets and thereby enhancing local content development as a whole. The existing PNDC Law 84 already has provisions for local content development. Section 23 clauses 10 to 14 provides that, “(10) A contractor or sub-contractor shall, in accordance with the Regulations and with the terms of a petroleum agreement or petroleum sub-contract, as the case may be, ensure that opportunities are given as far as is possible for the employment of Ghanaians having the requisite expertise or qualifications in the various levels of the operations. (11) A contractor or sub-contractor shall not engage in discriminatory practices on grounds of race, nationality or sex in the conditions of service provided for personnel. (12) A contractor or sub-contractor shall, as far as practicable, in accordance with the Regulations and the petroleum agreement or sub-contract use goods and services produced or provided in Ghana for his operations in preference to foreign goods and services. (13) A contractor or sub-contractor shall, in consultation with the Corporation, prepare and implement, in accordance with the Regulations and in accordance with the terms of any such petroleum agreement or petroleum sub-contract, plans and programmes for training Ghanaians in all job classifications and in all aspects of petroleum operations. (14) A contractor or sub-contractor shall while carrying out petroleum operations prepare and implement plans for the transfer to the Corporation of advanced technological know-how and skills relating to petroleum operations but this provision shall not be interpreted to disable the contractor or sub-contractor from protecting their competitive position in the petroleum industry or requiring the Corporation also to take steps to protect such competitive position.” Affua Amissah, an Officer from the Ministry of Energy, at the 3rd Association of Ghana Industries Local Content Exhibition and Conference in Accra, reiterated that the main objectives of the local content policy are to maximize the benefits of oil and gas wealth generation by optimizing the use of local expertise, goods and services in the oil and gas value chain; increase the capability and competitiveness of domestic businesses and industrial sectors; create supportive industries that will sustain economic development; and 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. Giving highlights of the local content regulations, she said Ghanaian companies will be given first preference in the grant of petroleum agreements and licenses. There shall be at least a 5% equity participation by a Ghanaian company before an IOC is deemed qualified to enter into a petroleum agreement or license, unless otherwise approved by the Minister. Foreign companies which intend to provide goods and services shall establish a joint venture company with a Ghanaian company and afford that Ghanaian company an equity participation of at least 10%. Contractors, subcontractors etc shall submit the plans including the following to the Commission: Employment and Training plan, Succession plan, Research and Development, and Technology Transfer. Another major boost in achieving the local content aspirations of the country is the passage of the Petroleum Commission Act in July 2011, Act 821, which set up the Petroleum Commission to oversee the regulation and management of petroleum resources. The Petroleum Commission is currently putting processes and procedures together to ensure adequate monitoring of local content. It is also reviewing local content plans, procurement plans and work permit requests of companies. A local content committee will be established shortly to oversee, coordinate and manage the development of local content. According to Mrs. Amissah the main objective of the programme is to improve public management and regulatory capacity while enhancing transparency, and strengthen local technical skills in Ghana’s emerging oil and gas sector. This programme has two components and is supported by a World Bank Credit to the Government of Ghana. Component A, which focuses on Sector Management support, provide diverse capacity building support to the Ministry of Energy and the Petroleum Commission; equipping of the Ghana National Petroleum Corporation data centre to safeguard the oil and gas data being generated through exploration and well development; diverse support to the Environmental Protection Agency to enhance its ability to monitor environmental matters in the oil and gas sector; support to the Ministry of Finance and Economic Planning, particularly the Ghana Revenue Authority, to prepare for management of oil revenues. Component B focuses on Educational support. Support to vocational training institutions for development of programs focused on skills for the oil and gas industry, including two technical institutes in the Western Region (Takoradi Technical Institute and Kikam Technical Institute) and the Regional Maritime University in Tema. Support to the University of Science and Technology in Kumasi to improve its petroleum engineering and petrochemical engineering teaching and research capabilities.