Local Content refers to the quantum/percentage of locally produced materials, personnel, financing, goods and services rendered to the oil industry and which can be measured in monetary terms. Local Participation on the other hand refers to the level of Ghanaian Equity Ownership in the oil and gas industry. To qualify as a Ghanaian/indigenous company, the company must have at least 51% of its equity owned by a Ghanaian with 80% management and senior positions occupied by Ghanaians.
The role of Local Content in Promoting National Development
Ghana made commercial discoveries of hydrocarbons in 2007.This has attracted the attention of several international oil and gas companies as well as local entities.
In order to promote Ghanaian interest (participation) in the petroleum value chain, two key pieces of legislation were passed:
The Petroleum Commission Act, 2011 (Act 821)
Act 821 established the Petroleum Commission for the regulation and management of the utilisation of petroleum resources in Ghana and coordination of policies in relation to them. In relation to local content, specifically, section 3 (f) of Act 821 mandates the Commission to promote local content and local participation in petroleum activities as prescribed in relevant legislation to strengthen national development. Additionally, the Board of the Commission is required to establish a Local Content Committee to deal with local content and local participation issues.
The Petroleum (Local Content and Local Participation) Regulations 2013, L.I 2204
In November, 2013, LI2204 was promulgated to inter alia promote maximisation of value-addition and job creation through the use of local expertise, goods and services business, financing in the petroleum industry value chain and their retention in Ghana. The Local Content Committee established by the Board of the Commission is required to oversee the implementation of LI2204.
Whose responsibility is it to promote local content?
Every contractor, sub-contractor, licensee, the Corporation or other allied entity carrying out petroleum activities has a responsibility to ensure local content forms a central plank of its operations. As regulator, the Commission must ensure both local and foreign companies comply with the provisions and requirements of LI2204.
Highlights of LI2204
What is Local Content
The quantum/percentage of locally produced materials, personnel, financing, goods and services rendered to the oil industry and which can be measured in monetary terms.
What is Local Participation
Ghanaian equity or interest in petroleum operations in Ghana.
Commission’s Strategic Approach to Local Content Development:
Work Permit Applications
The Commission monitors compliance with national policies, laws, regulations and agreements related to petroleum activities and issues permits for specific petroleum activities as required under relevant legislation. In accordance with section 16 of the Immigration Regulations, 2001, (LI 1691), an employer who wishes to apply for a Work Permit for its employee must submit an application through the Director of Immigration, who upon investigation will submit a report to the Immigrant Quota Committee for consideration and approval.
To facilitate the above process, the Commission receives all work permit applications for Companies who wish to engage expatriates to work in the petroleum upstream sector. The Commission evaluates and furnishes the Director of Immigration with its recommendations for approval. The Commission has set up a Work Permits Committee to assist in this process and to serve as an initial screening point for applications for Work Permits for expatriate staff of companies engaged in petroleum operations in Ghana.