Local Content and Employment Issues in Ghana

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Since the discovery of major oil reserves at the Jubilee oil field in 2007, the active involvement and participation of locals in the oil and gas industry has become a major policy issue in Ghana.[1] Local content, a term referring to the percentage of locally produced materials, personnel, financing, goods and services rendered to the oil industry,[2] has great potential to improve Ghana's socio-economic development, but has been constrained by capacity limitations in several areas, including financing, human resources, and technology.[1]

The Ghana National Petroleum Corporation (GNPC) said in January 2012 that, of the $6 billion pumped into oil activities in Ghana over the past several years, less than 10% has come from local suppliers of goods and services.[3]

Policy framework

After a nation-wide consultation process,[2] Ghana's Ministry of Energy formulated a policy framework dealing with local content issues in February 2010, which set a number of key policy objectives:

  • Maximise the use of local expertise, goods and services, and financing in all aspects of the oil and gas industry value chain
  • Develop local capability through education, skills and expertise development, transfer of technology, and active research and development
  • Achieve a degree of influence or control over development initiatives for domestic stakeholders
  • Achieve at least 90 percent local content and local participation in all petroleum activities by 2020
  • Increase capabilities and international competitiveness of domestic businesses and industrial sectors
  • Create oil and gas and related supportive industries to sustain economic development[1]

In addition to the objectives listed above, the policy framework mandates that all regulatory authorities, contractors, sub-contractors and other entities involved in Ghana's oil and gas industry should consider Ghanaian companies and operators before foreign entities in the award of contracts. It also calls for the establishment of an "Oil and Gas Business Development and Local Content Fund" to support local capability development.[1]

Progress on legislation

In November 2011, the Ministry of Energy summoned service providers in Ghana's petroleum industry to a stakeholders meeting to address the government's efforts to increase Ghanaian content and participation. According to the website Modern Ghana, the meeting came amid reports of Ghanaians being sidelined to the benefit of other nationals in recruitment by service providers in the sector. Emmanuel Kofi Armah-Buah, a Deputy Minister of Energy, said his ministry had received increasing complaints from stakeholders, especially the Rig Workers Association, of companies not living up to expectations in their employment of Ghanaians.[2]

The Ministry of Energy said in December 2011 that Parliament had begun studying the national local content policy framework,[4] which had already been approved by the Cabinet,[2] with the aim of improving Ghanaian participation in the operations of oil and gas companies in the country.[4]

According to Deputy Energy Minister Armah-Buah, international oil and gas companies such as Tullow, Kosmos, MODEC, Saipem and Oando have taken steps to improve their local content capacity, and the World Bank voted in February 2011 to give Ghana $30 million to support capacity development programes to improve Ghanaian participation in the oil and gas industry.[2]

References

  1. 1.0 1.1 1.2 1.3 "Local Content and Local Participation in Petroleum Activities" Ministry of Energy, 26 February 2010.
  2. 2.0 2.1 2.2 2.3 2.4 "Towards Greater Local Content: Energy Minister Summons Oil Coys" Modern Ghana, 14 December 2011.
  3. "Local suppliers contribute less than 10% of $6b spent on Ghana oil fields: GNPC" Ghana Business News, 20 January 2012.
  4. 4.0 4.1 "Ghana Parliament studying Local Content Policy on oil & gas sector" Ghana Business News, 14 December 2011.