Amend Local Content Act to address Salary, Other Challenges – ACEP

The Africa Centre for Energy Policy (ACEP) is recommending amendment to Ghana’s local content Regulations to bridge the salaries and wages gap between expatriates and Ghanaian employees in the Oil and Gas sector as practiced in Angola, and in the Middle East and North African (MENA) region. This will minimize the incidence of labour upheavals in Ghana.

According to ACEP, the current situation, does not auger well with fairness, and transparency regarding the way local workers are treated.

Besides this, ACEP is advocating the creation of a local content fund to provide financial support for indigenous investors and operators in the industry.

In a report dubbed “The Implementation of Ghana’s Local Content Regulations in the Upstream Sector Achievements, Challenges, and Way Forward” ACEP indicates that the common challenge running through the operations of indigenous Ghanaian companies is the lack of financial support. This concern, it said is exacerbated by high cost of borrowing coupled with intense competition from international players that have access to cheaper sources of financing from international financial markets.

To address this, the Petroleum (Exploration and Production), Act 2016 (Act 919) has provided for the establishment of a Local Content Fund. Many industry watchers are optimistic that this intervention is needed to bridge the financing gap in the upstream sector.

However, how well the Local Content Fund perform would depend to a large extent on the management and enforcement policies put in place by the Petroleum Commission.

Whilst it is recognized that the implementation of Petroleum (Local Content and Local Participation) Regulation, 2013 (L.I. 2204) has yielded some positive results for the country through job creation and increased use of Ghanaian goods and services, Petroleum Commission should intensify its monitoring function to promote specialized skills development and transfer of technology to Ghanaians.

ACEP acknowledged the fact that requirements for foreign companies to form joint ventures with indigenous Ghanaian companies under regulation 4 (6) of L.I. 2204, has granted a number of Ghanaian companies access to the technologies and operations of their international joint venture partners. As a result, Ghanaian participation in the award of contracts is currently over 20% in both Tullow Ghana Limited, and Eni Ghana Exploration and Production Limited.

Four years from the passage of Ghana’s Local Content (L.I. 2204), it can be deduced that, the country has made significant progress in both employment of Ghanaians and the supply chain aspect of the industry. However, the country could have benefitted more if there was an effective local content support and enforcement system.

Source: Adu Koranteng

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