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Comply with local content law or face sanctions – Oil, gas companies cautioned

  • SOURCE: | qwesa2big
  • crudeoilThe Petroleum Commission (PC) has asked oil and gas firms to comply with the local content law or face sanctions.

    It said firms that had persistently failed to comply with the law would face sanctions, including a revocation of their licences, imprisonment and paying of fines.

    The Director in charge of Special Services at the PC, Mr Kweku Boateng, said there was laxity in compliance in the annual local content performance reports that operators were supposed to submit to the commission to assist in the monitoring of the implementation of the law.

    He was speaking at a workshop on local content compliance for operators in the upstream sector in Accra Thursday.

    The Petroleum (Local Content and Local Participation) Regulation, 2013 (L.I. 2204) came into full effect on February 19, 2014, to give Ghanaians a grip on the oil and gas industry.

    The L.I. 2204 is designed “to promote the maximisation of value-addition and job creation through the use of local expertise, goods and services, businesses and financing in the petroleum industry value chain and their retention in the country”.

    It is also intended to “develop local capacities in the petroleum industry value chain through education, skills transfer and expertise development, transfer of technology and know-how and active research and development programmes”.

    The workshop which brought together stakeholders in the upstream sector, was to ensure that they were abreast of the local content law on oil and gas and to deepen the participation of indigenous Ghanaian companies in the sector.

    Participants were taken through the joint venture structure and legal due diligence process requirements to ensure that operators meet international operational standards in the industry.


    Mr Boateng said the PC had restrained itself from sanctioning operators who flouted the law because it is assumed that operators still needed time to keep abreast of the law.

    However, he said, the commission would not hesitate to sanction operators, including revoking their licences in future.

    He said the workshop was, therefore, intended to remind operators of the law and its associated obligations to allow recalcitrant operators to learn and amend their ways.

    “Achieving maximum compliance and technical and financial capacity of indigenous Ghanaian companies to be able to handle technological based jobs, as well as succession plans for the recruitment of locals to replace expatriates, are key, hence the need to ensure that there is no laxity in the compliance regime,” Mr Boateng stressed.

    Although about 75 per cent of Ghanaians are engaged in the sector currently, there were still challenges that hindered local companies from competing with the foreign ones, he said.

    He cited high interest rates and the unavailability of credit facilities as some challenges that deterred local companies from accessing credit, thereby giving their foreign counterparts a competitive advantage over them.

    He added that inadequate capacity building to enable local companies to compete with foreign ones was another challenge.

    Way forward

    As part of measures to encourage local industries to participate in the sector, Mr Boateng said, “For contracts ranging from $100m, since locals do not have the financial capacity, the contracts are to be banded, so that indigenous companies could also benefit and contract terms are reduced for all to benefit,” he said.

    For her part, Dr Juliette Twumasi-Anokye took the participants through the provisions of the law, saying the essence of the law was to make local companies conversant with the oil and gas industry and, subsequently, take over its management.


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