By Gilbert Boyefio
Since the coming into force of the Local Content Law and its regulations in Ghana, many indigenous companies have been under the illusion that the law is just to protect their interest and therefore its compliance is for only foreign companies.
However the Petroleum Commission has emphatically stated that the compliance to the local content law and all its regulations applies to everyone operating in the upstream sector of the country including indigenous companies.
The Commission has stressed that irrespective of one’s status or nationality the requirements of the law must be met and adhered to so far as one is operating in the upstream sector.
Interacting with stakeholders in the oil and gas industry in Ghana on matters relating to Local Content and its compliance, Dr. Twumasi-Anokye, the Coordinator of Local Content at the Petroleum Commission, noted that due to the strange perception held by the indigenous companies concerning the law, when they are awarded contracts and needs to also subcontract they give it out to foreign companies.
“When it comes to procurements and contracts, a number of local companies think that once they get a big contract from ENI or Tullow and they have to sub contract, they can give their contract to whomever they like and do not have to go through the Commission.
But yet these same local companies expect ENI, Tullow and the rest to come through the Commission for them to get contracts. This is totally wrong.
Under the law everybody sub contracting in the upstream sector must come through the Commission. Any sub contracting which is over $100,000.00 the process has to come through the Petroleum Commission.
What we are saying is that when indigenous companies want to subcontract after benefitting from a big subcontract from an IOC they also has to comply with the procedure. It is not only the white guys who comply with this, but Ghanaians too,” she indicated.
According to her, there are smaller Ghanaian companies that can also benefit from the big contract that the other indigenous companies have gotten, adding that, “What has been done to you, you also do it to your fellow Ghanaian company.”
She insisted that local content has to be a key component of all companies operating in the upstream sector.
Joint Venture
Touching on Joint Ventures (JVs), Dr. Twumasi-anokye pointed out that the idea of the joint venture is not to create scenarios where people just take shares in a company, does no work and at the end of the year get paid.
She said for the purpose of the local content law it is very important for the Commission to see that there is technology transfer, capacity building and transfer of knowledge.
According to her, most of the time questionnaires sent to players in the industry, especially indigenous companies, for information on their operations and JVs don’t get filled and returned to the Commission.
“A lot of the indigenous companies have not responded to the questionnaire. We write to you to know the roles and responsibilities of the parties in the joint venture.
As a result of that, we have come to you under regulation 4 (7) asking you to tell us what it is that you are doing under the joint ventures. Some of you have responded but unfortunately majority of the indigenous companies have not responded to us.
We hope that after today that will change”.
She pointed out that even though the indigenous companies do not respond to the letters and questionnaires that the Commission sent them, interestingly when they get into trouble with their joint venture partners the first place they come to is the Petroleum Commission. They come to complain that they have not been paid this or that.
“But the difficulty for us in such situation is that we are not privy to the agreement. So now that there is a dispute how do we help you? Because we do not know what is really going on in that relationship.
Though the law is there to protect you we cannot do so because we do not know what is really going on and also the things that you have agreed to.
If we are here to protect your interest the little thing you can do to help us is to tell us what you are doing,” she advised.
Annually all companies have to send their local content plans to the Commission. These plans are to be submitted in January of every year. This should also include a company’s procurement plan, employment plan, and so forth.
The regulations also requires that if you are operating goods and services in Ghana you have to get an office established and it has to be done in association with an indigenous company. This is an emphasis on the JV requirement which goes to show that when the law talks about the JV it is not talking about a sleeping partner, or a capital injection partner.
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