GHANA:Finally, Ghana Passes Oil and Gas Industry Local COntent Law

Ghana has joined the list of Africa countries that has local content laws regulating operations in the oil and gas industry. The Petroleum (Local Content and Local Participation) Regulation, 2013 (LI 2204) which was presented before the Ghana Parliament in July 2013 has been passed into law despite opposition from foreign upstream oil and gas companies and their governments.

 

The purpose of the regulation include the promotion 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 Ghana.

 

Speaking to the Daily Graphic, the Minister of Energy and Petroleum, Mr Emmanuel Armah-Kofi Buah expressed his appreciation to Parliament for the passage of the law and said Ghanaians had been moved from the back of the bus to the front. He said the law was a major step towards ensuring that the local content objective intended to help Ghanaians benefit from the country's new resource was realised.

 

However, some energy law experts believe the Ghanaian local content legislation still has the same problems with those operating in other parts of the continent. According to Harrison Declan, an Aberdeen trained energy law expert based in Nigeria, "while the passage of the local content regulation by the Ghanaian Parliament is a welcome development for the country, the same issues arising in local content legislations in Africa still rears its ugly heads. It seems in local content legislations, African governments have shifted their duty of providing education for their citizens to the foreign oil companies without any provision for compensating these companies. The result would be a situation where the foreign companies are forced to operate in less favourable business climate and would always pull out when a more favourable business climate presents an opportunity. In view of rising development of unconventional oil and gas sources, like Shale, African countries must ensure that those companies who comply with the local content laws are encouraged and compensated either in form of tax reliefs or other incentives".