PARTICIPATION IN LOCAL CONTENT IN THE OIL AND

GAS INDUSTRY; OPPORTUNITIES FOR THE

NORTHBy Samuel Zan Akologo

Country Director – SEND – GhanaDenmark Seminar by GDCA

31st October, 2010.

Introductory Comments

• Discovery of oil and gas in Ghana is a double-edged sword – Needs careful handling.

• It can be a curse or a blessing – we need to proactively seek the blessing and reject the potential curse!

Why should we be worried?

• Existing laws and policies in the extractive industry did not anticipate oil and gas hence inadequate.

• Oil and gas management require ‘joined-up’ planning and inter-ministerial coordination; e.g. Interior, Finance, Trade, Industry etc. Too many grey areas.

• High potential for tax evasion

Contd.

• Africa has no single good example to learn from in oil and gas management.

• Weak technical know-how in the sector

• Other extractives like gold mining failed us

• North did not benefit from earlier national wealth – cocoa, minerals, timber etc

• Fledgling and weak governance

What is Local Content?

• General objectives of Local Content

• Ghana’s Goal for Local Content

• Policy Objectives

General Objectives of Local Content

• Accelerate growth of indigenous involvement in the petroleum sector

• Create opportunities for individual citizens to invest in upstream, midstream and downstream oil and gas development

• Enhance the development of national technical and commercial oil and gas skills

Contd.

• Facilitate increased use of competitive national goods and services

• Expand the commercial co-operation between national and foreign companies

• Strengthen the national financial markets by floating shares in upstream and midstream companies

Ghana’s goal for Local Content

• To define actions that will ensure that the constraints and challenges are resolved to enable Ghanaians take control and thus maximise the benefits to them and by the Ghanaian state.

Policy Objectives on Local Content• Sustainable exploitation of the country’s oil and

gas endowment• Judicious management of the oil and gas

revenue for the overall benefit and welfare of all Ghanaians, including future generations

• Attraction of increased local value-added investments in the oil and gas sector

• Creation of job opportunities; and • Indigenization of knowledge, expertise and

technology, thus creating a self sustaining and buoyant economy.

General Areas of participation in Local Content

• Supplies/Procurement (Use of local contractors – regional suppliers)

• Labour – both skilled and unskilled

• Taxation and Royalty policies

• Government expenditure (investment, services or luxury)

• Transfer of technology

Navigating the Terraina). Things to Avoid

• Corruption

• Hidden Agendas

• Promoters – Oil Mafias

• Political Pressure – let managers and technical people work

Contd.b). What to look for

• Transparency – access to information, full disclosure etc

• Open contracting• CSO, media and legislature oversight• Revenue management and spending (fiduciary

responsibility)• Integration in national development plans and

budget (aggressive, widespread and sustainable development in the short term, SADA)

• Health, Safety and Environment

How can we maximise opportunities?

• First for Ghana, our beloved country and especially deprived areas, including Northern Ghana

• Some action points could include the following:

Contd.• Independent regulation and oversight

• Public education

• Building capacity of legislature

• Support, including training, for key institutions – Ministries: Environment, Finance, Economic planning, GNPC, Ghana Revenue Authority, EPA, Universities for new curriculum development.

Contd

• Resolving ownership issue – Western Region? Nzemas? NDC Gov’t? Politicians? Or State?

• Ensuring national budget reflect national development priorities

Conclusion: The Seneca Oil Poem

• The Healthful balm, from Nature’s secrete spring,

The bloom of health, and life, to man will bring;

As from her depths the magic liquids flows,

To calm our sufferings, and assuage our woes.