Deloitte Ghana and the Petroleum Commission have collaboratively organized a webinar titled “Understanding the Local Content Regime in the Upstream Oil and Gas Sector in Ghana.”
The highly attended event aimed to deepen the discourse on current local content issues in the upstream oil and gas sector, providing perspectives from regulators, consultants, and industry players.
Opening the webinar, Daniel Kwadwo Owusu, Deloitte’s Country Managing Partner, highlighted Ghana’s continuous efforts to derive maximum value from its natural resources to build a resilient economy. He emphasized the importance of the “Local Content” framework, which seeks to extend the benefits of the extractive sector beyond direct value addition through partial local ownership and links to other sectors.
“An important theme in this equation is the ‘Local Content’ framework – which is the extent to which the output in the extractive sector generates further benefits to the economy beyond the direct contribution of its value-added, through part local ownership and links to other sectors.”
Daniel Kwadwo Owusu
Mr. Owusu added that the discussions would generate valuable insights for all industry players and shape policy direction in the coming years toward an even stronger industry.
Building Capacities of Local Firms
Egbert Faibille Junior, Chief Executive Officer of the Petroleum Commission, discussed the requirement for foreign companies operating in Ghana’s upstream oil and gas industry to incorporate Joint Ventures (JVs) with Indigenous Ghanaian Company (IGC) counterparts.
He mentioned the introduction of strategic alliances and channel partnerships as alternatives to the JV arrangement, in line with the Petroleum (Local Content and Local Participation) (Amendment) Regulations, 2021 (L.I. 2435). “These new arrangements allow foreign companies to participate in Ghana’s upstream oil and gas industry while building local capacity and skills, as well as developing internationally competitive businesses,” stated Faibille Junior.
Mr Faibille Junior assured that local participation would be maximized through the procurement of local goods and services, acting as a multiplier for national economic development. Faibille Junior emphasized that Ghana’s local content law is not about nationalizing the petroleum sector but about partnering with investors to develop local capacities that benefit both private operators and the citizenry.
Faibille Junior outlined several initiatives undertaken by the Petroleum Commission to develop local capabilities and maximize local participation. Following the passage of the Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I. 2204), the Commission engaged comprehensively with international oil companies, major service providers, and other stakeholders to clarify legislative provisions and ensure effective implementation.
Faibille Junior further explained saying “I must admit that this exercise has gone very well, and we are able to clarify various provisions or concerns to our partners throughout the various areas that we have had”.
Furthermore, the Commission established a local content committee to oversee the implementation of local content programs, projects, and initiatives. The committee’s membership has since been enhanced to include key stakeholders in the sector, playing a crucial role in the effective implementation of local content regulations.
New Local Content Models and Amendments
Mr George Ankomah, Deloitte Ghana’s Lead Tax Partner, highlighted the significance of introducing channel partnership and strategic alliance models. These models allow foreign investors to partner with IGCs without necessarily incorporating a local company, particularly benefiting short-term projects by reducing administrative burdens.
“This is a very good initiative which will especially allow for specific short-term projects to be executed without the administrative burden of a JV entity. I think that this introduction once implemented would be very great for the industry.”
Mr George Ankomah
Mr George Ankomah also discussed amendments to the definition of what constitutes an IGC, now requiring 100% Ghanaian ownership, which increases the involvement of Ghanaians within the industry. Additionally, certain supplies are now reserved exclusively for Ghanaians.
Kwaku Boateng, Director of Local Content at the Petroleum Commission, shared insights into the progress made in the local content regime since the discovery of oil in Ghana. While acknowledging challenges, he emphasized that the Commission continues to review and introduce regulations and guidelines in line with current industry developments.
The Deloitte and Petroleum Commission webinar, featuring significant participation from across the petroleum ecosystem and other sectors, aimed to address current local content issues in the upstream sector from regulatory, investor, and business consultant perspectives. The discussions provided a platform for valuable insights and policy shaping for the future of Ghana’s oil and gas industry.
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