According to the Ghana National Petroleum Corporation (GNPC), Local Content refers to the level of use of Ghanaian local expertise, goods and services, people, businesses and financing in oil and gas activities. Government will therefore need a sound financial footing, fitting technology and strong expertise in the sector to be able to benefit fully from the resource.
The Local Content policy stipulates that all regulatory authorities, operators, contractors, sub-contractors and any other entities involved in any project, operations, activity or transaction in Ghanaian Oil and Gas Industry shall consider local content as an important element in their project development and management philosophy for project execution.
The policy is to give first consideration to Ghanaian independent operators in the award of oil blocks, oil field licenses, oil lifting licenses and in all projects for which contract is to be awarded in the Ghanaian oil and gas industry.
An important feature of this policy stipulates that, where bids are being evaluated, and where bids are otherwise equal, the bid containing the highest level of Ghanaian content shall be selected. Such a provision sounds great for local Ghanaian operators and businesses and will in effect place Ghanaians at the forefront of the nation’s oil business in a relatively shorter period.
In the case of non-Ghanaian ownership and operations, the entity must provide for the participation of a citizen of Ghana in an interest of at least five percent in the exploration and production activities under petroleum licenses. Another important feature of the policy is that a fund, Oil and Gas Business Development and Local Content Fund, is to be established to support local capability development aspects of the local content framework. The fund will be used primarily for education, training and research and development in oil and gas. Sources of the fund will include contribution from Licensed Operators, Oil and Gas Revenue, levies, grants and other support from Ghana’s Development Partners. The Ministry of Energy or the Ministry responsible for petroleum will oversee the disbursement of the fund. This is undoubtedly fitting for a developing nation like Ghana but it remains to be seen how effective the administration of this fund will be.
In general, the move by government is expected to obligate operators to attach significant importance to local content and to ensure that as much benefits as possible are retained in the local economy by indigenes.
Click here for the complete local content policy.