Deloitte, Petroleum Commission discuss local content regime in oil sector
DELOITTE Ghana and Petroleum Commission have jointly held a webinar on ‘Understanding the Local Content Regime in the Upstream Oil and Gas Sector in Ghana’.
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The webinar, which was highly participated, sought to deepen the discourse on the current local issues pertaining to the upstream oil and gas sector from three perspectives - Regulator, Consultant and Industry Players.
Opening the webinar, Deloitte’s Country Managing Partner, Daniel Kwadwo Owusu, said Ghana continued to explore the most efficient and effective ways to derive maximum value from its natural resources to build a more resilient economy and future for the next generation.
“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”, he explained.
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
The Chief Executive Officer of the Petroleum Commission, Egbert Faibille Junior, said foreign companies operating in the upstream oil and gas industry in Ghana were required to incorporate Joint Ventures (“JV”) with their Indigenous Ghanaian Company (IGC) counterparts.
“As an alternative to the JV arrangement, the Petroleum (Local Content and Local Participation) (Amendment) Regulations, 2021 (L.I. 2435) has introduced strategic alliances and channel partnerships as new arrangements through which foreign companies can participate in Ghana’s upstream oil and gas industry.
This is in line with the Commission’s objective to build local capacity and skills as well as develop internationally competitive businesses”, he stated.
According to him, his outfit would not discourage foreign participation but would also not allow inefficient and uncompetitive local processes.
He gave an assurance that local participation would be maximised through the procurement of local goods and services which will act as a multiplier for national economic development.
He outlined the initiatives undertaken by the Petroleum Commission to develop local capabilities and maximise local participation in the oil and gas sector.
First, he said following the passage of Petroleum (Local Content and Local Participation) Regulations, 2013 (“L.I. 2204”) as amended, the Commission embarked on a comprehensive stakeholder engagement with all international oil companies, major service providers and other key stakeholders on the provision of the legislative instrument and to seek their inputs and cooperation in its implementation.
Secondly, following the passage of L.I. 2204 as amended, he said the Commission established the local content committee overseeing the implementation of local content programmes, projects and initiatives. The committee’s membership has since been enhanced to include key stakeholders in the sector.
Mr Faibille Junior continued that the committee played a key role in the effective implementation of local content regulations.
Strategic alliances
Deloitte Ghana’s Lead Tax Partner, George Ankomah, highlighted the significance of the introduction of channel partnership and strategic alliance models of investments that allow foreign investors to partner IGCs, without necessarily incorporating a local company.
“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 this introduction once implemented would be very great for the industry,” he added.
“We have also seen amendments around the definition of what constitutes an IGC which used to be that the Ghanaian national should own at least 51 per cent. This has now been amended to 100 per cent Ghanaian ownership, which in other words increases the involvement of Ghanaians within the industry. Then we have also seen another introduction which the supplies are reserved for Ghanaians,” he added.
Progress
Sharing insights on the local content regime, Kwaku Boateng, Director, Local Content at Petroleum Commission, said the industry has come far since the discovery of oil, adding, a lot has been done in the area of local content with enviable achievement.
Though he admitted that there were some challenges, he pointed out that the Commission continued to review and introduce regulations and guidelines in line with the current development in the industry.
The Deloitte Petroleum Commission webinar witnessed significant participation across the petroleum ecosystem and other sectors.
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The aim of the webinar was to discuss the current local content issues pertaining to the upstream sector from the perspectives of a regulator, investor and business consultant.