Local Content

Additional Information

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

  • The regulation gives preference to indigenous Ghanaian companies participating in petroleum activities:
    • At least 5% equity participation of an indigenous Ghanaian company other than GNPC in all petroleum licenses
    • Non-indigenous companies to enter into joint venture agreements (at least 10% equity participation) with an indigenous Ghanaian company in the provision of goods and services.
    • An indigenous Ghanaian company is one incorporated in Ghana with at least 51% Ghanaian equity ownership and at least 80% of Ghanaians in senior management positions.

  • Contractors must submit quarterly and annual local content and procurement plans to the Commission.
    • a. The local content plans to include:
    • b. Employment, Training Program and Budget
    • c. Succession Plan
    • d. Technology Transfer and Budget
    • e. Research and Development Plan
    • f. Legal Services
    • g. Financial Services

  • Contractors must notify and seek the Commission’s approval on contracts
    • Exceeding $100,000 cedi equivalent
    • Sole or single sourcing with justification
  • Commission to ensure compliance, monitoring and enforcement through:
    • The development of industry Guidelines
    • The submission of quarterly performance reports:
    • Local Content Performance Report
    • Employment and Training Report
    • Technology Transfer Report
    • Investigations into operational issues
  • The regulation makes provision for offences and penalties under Regulation 46.
  • The LI has set minimum targets to be achieved, taking into consideration current and future capabilities in areas including;
    • FEED
    • Fabrication and Construction
    • Materials and Procurement
    • Well Drilling Services
    • Marine Operations and Logistics Services
    • Transportation, Supply and Disposal Services

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:

  • Programs
    • Working Groups with companies engaged in petroleum operations;
    • Awareness creation and stakeholder engagements;
    • Capacity building for local service providers on procurement and contracting issues;
    • Establishment of an on-line notification and bidding system to facilitate tendering and contracting processes;
    • Periodic publication of procurement plans and upcoming job vacancies;
    • Design and conduct baseline studies to ascertain the capacity of local service providers; and
    • Designation of specific tenders for the local market.

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.

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Petroleum Commission

Ghana

Plot No. 4A, George Bush Highway, Accra, Ghana

P.O. Box CT 228 Cantonments, Accra, Ghana

Telephone: +233 [0] 302 953392 | +233 [0] 302 953393

eMail: info@petrocom.gov.gh

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