ACEP Launches Report on Oil & Gas Governance Challenges & Local Content


Dec 2014

The Africa Centre for Energy Policy, Ghana Chapter (ACEP Ghana), has launched a report which seeks to highlight governance challenges, corruption and local content issues in the oil and gas industry.

The Report titled ‘Local Content Development in the Petroleum Upstream sector—A Comparative Analysis of Ghana, Nigeria and Angola,’ was generated by ACEP with support from IBIS Ghana under its Africa Against Poverty (AAP) Programme.

IBIS is a Danish Non-Governmental Organization, working at the global, national and local levels for the empowerment of civil society and underprivileged communities, with a focus on equal access to education, influence and resources.

The Report seeks to make broad policy recommendations on local content developments in the oil and gas industry within the framework of local content legislations in Ghana, Angola and Nigeria.

The Report also throws light on the local content legal regimes of Nigeria, Ghana and Angola, based on their competitiveness, absorptive capacities and existing infrastructure.

In addition, the Report seeks to conduct a gap analysis to examine the capabilities and effectiveness of the implementation strategies adopted by these countries to implement the local content legislations.

The Report notes that the governance and monitoring of the implementation of L.I. 2204 has been subsumed into the wider function of Petroleum Commission activities.

This, the Report says, threatens the achievement of the core objectives and targets set out in the law and recommends, therefore, that the Local Content Committee (LCC) be given complete autonomy in order to be able to effectively implement L.I. 2204 without interference.

In his remarks at the launch of the Report, Mr Mohammed Mahamud, Co-ordinator for the AAP Programme, IBIS, said the Report was expected to influence decisions concerning the oil and gas sector.

Mr Mahamud said the objective of the AAP Programme was to fight the structural forces that contributed to poverty and stressed the need for enterprises and businesses to be at the centre of development.

The Board Chairman of ACEP, Dr Jemima Nunoo, described the Report as a living document to be used to educate Ghanaians on the use of the country’s natural resources, particularly oil and gas.

For his part, Dr Mohammed Amin Adam, Executive Director of ACEP Ghana urged Parliament, as it considered the Petroleum (Exploration and Production) Bill, to adopt standards that would safeguard Ghana’s oil and gas resources against corruption.

Dr Adam also called for the enactment of Regulations for the application of competitive bidding as provided for in section 32 (m) of the Petroleum (Exploration and Production) Law 1984 (PNDC Law 84).

He said if the new Petroleum (Exploration and Production) Bill 2014 was passed without any provision to provide for the disclosure of beneficial ownership information, there was bound to be serious governance risks with implications for aggravated corruption.

He added that without clear regulations in the law on the criteria for determining qualifications, the Petroleum (Local Content and Local Participation)) Regulations (L.I. 2204) would open the process of deciding who qualified to hold the minimum equity to potential abuse.

He explained that according to Regulation 4 of L.I. 2204, even though regulation 4 provided for a minimum of 5% equity for indigenous local persons, sub-regulation 4 gave the Minister responsible for power the power to decide on who qualified to hold the minimum equity.

On the operations of the National Oil Company— the Ghana National Petroleum Corporation (GNPC)—Dr Adam expressed concern about the mode of financing GNPC’s operations as provided for in section 15 (2) of GNPC Law.

The Law requires the Corporation to borrow money on the recommendation and approval of the Secretary responsible for Finance as to the amount, source of the loan and the term and conditions under which the loan may be effected.

He said the provision in the GNPC Law only provided a convenient route to seek loans without Parliamentary scrutiny and, therefore, Parliamentary approval, with the tendency to source funds from questionable sources for questionable projects not subject to transparency and accountability tests.

Source: ISD (G.D. Zaney)