Ghana Reviews Local Content And Local Participation Regulation
In an effort to ensure that Ghana benefits immensely from its oil and gas resources, and avoid becoming another enclave for resource exploitation dominated by foreign interests, the Government of Ghana is undertaking a review of its Local Content and Local Participation regulations to bring it up to speed with the current demands of the industry.
According to the Petroleum Commission, “five years of implementation of the Local Content regulation requires stock taking to know where we have excelled; areas we need to improve and those we need to change altogether. We have completed the review of the Petroleum (Local Content and Local Participation) Regulations, LI 2204 and the Joint Venture Guidelines to make them more pragmatic, market oriented and reflective of industry trends”.
Local Content promotion has become an integral part of the oil and gas industry worldwide. However, since this is not a one side fit all strategy, it requires countries to develop their own regulatory framework to support it.
Development of new guidelines
Based on the numerous challenges encountered with the law, during the compliance monitoring audits in relation to aspects of the local content law, the Petroleum Commission was compelled to develop a number of guidelines to provide directions to companies operating in the sector. These guidelines include, technology transfer policy guidelines, research and development guidelines, electronic and bidding guidelines, financial service guidelines, insurance, protocol, and bid evaluation guidelines, and reservation of goods and services guidelines.
Common qualification system
The Commission has established the Common Qualification System (CQS) in fulfilment of Regulation 37 of LI 2204. “It seeks to address the current challenges we have, which is, the use of different qualification systems and standards by IOCs in prequalifying sub-contractors. The system seeks to create a single window system for prequalifying all companies that intend to engage in petroleum activities.
In a similar vein, work has been completed on the Electronic Portal. The E-Portal as the name suggests is to enhance communication between the Petroleum Commission on one hand and our stakeholders on the other. The platform would also allow companies to announce their procurement plans, issue tender notifications and receive alerts on specific issues online thereby reducing the information asymmetry,” Mr. Prince Benjamin Aboagye, Acting Deputy Chief Executive Officer of the Petroleum Commission, said.
Ghana, over the years have taken the position that petroleum resources exploitation should last beyond the direct benefits of fiscal receipts by the government but have a transformative impact on the nation’s economy and citizens welfare. Government is therefore focused on deepening Ghanaian participation through the development of related industries as well as establishing forward and backward linkages between the oil and gas sector and other productive sectors of the economy.
“Having implemented the existing local content regulations for about five (5) years, we have identified some major challenges that if not addressed could impede the realization of some of the policy objectives. The government through the Commission has for the past three years been working to deepen local content and local participation as well as put in place measures to address the challenges identified.
These initiatives include: capacity building and certification for local companies, training and capacity development for Ghanaians, establishing of common qualification system and E-Portal to streamline procurement and contract administration processes, and development of new guidelines to aid compliance to the local content law.”
Gilbert Borketey Boyefio