Local firms focusing on low-hanging fruit in petroleum sector

Deputy Minister for Energy, William Owuraku Aidoo

A Deputy Minister for Energy, William Owuraku Aidoo, has challenged indigenous companies – particularly in the petroleum sector – to move away from the simplest and easiest work in the energy sector and strive to develop capacity to stay competitive.

According to him, drawbacks ranging from lack of finance, human capital development, technology among others, go a long way to adversely affect the competitiveness of indigenous businesses operating in the oil and gas industry.

Speaking at the opening of the 2019 Ghana Energy Summit, the minister stated: “These barriers to local participation have resulted in over-concentration of local companies on the low-hanging fruit, and less participation in the high quality petroleum and technological intensive services”.

Another major challenge facing these indigenous companies, the minister pointed out, is their inability to meet international standards, coupled with inadequate certification.

These are due mainly to high cost of certified employees and companies, small and poor structured-nature of most companies – thus failing to meet competency requirement.

He added that the limited capacity of local companies to deliver services required, due to absence of infrastructure to support the petroleum industry, limits the volume of work to be carried out in the country.

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Furthermore, Mr. Aidoo added, there is a limited participation of Ghanaian companies in joint venture activities, largely due to the fact that foreign companies are restructuring their JVs’ shareholding structure to become indigenous local companies – overlooking the line of businesses level for participation of indigenous companies that has been recommended.

Also, the misalignment of roles and responsibilities is making it difficult for technology transfer; hence the reluctance of indigenous companies to enter into joint ventures.

The petroleum division of the energy sector has seen increased growth of local firms from 2012. For instance, by the end of 2016, 776 companies were registered; with 480 being local companies providing either direct or indirect services ranging from catering services, logistics supply, to fabrication and waste management services.

Additionally, between 2014 and 2017 there was a significant and progressive increase in the contracts awarded to indigenous companies; for instance, within this period ENI Ghana Exploration and Production Limited spent a total of US$6.3billion in developing the offshore Cape Three Points Field.

Contracts worth about US$1.76billion, constituting about 28 percent during this development process, were awarded to indigenous Ghanaian companies. In total, about 250 indigenous Ghanaian companies benefitted from those contracts – 51 percent indigenous in the electricity sector, the minister noted.

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On his part, the CEO of Ghana National Petroleum Commission (GNPC), Dr. K. K. Sarpong in his opening remarks at the summit urged stakeholders to recognise the need to develop local capacity in oil and gas, and all the value chain, through education, skills and expertise development, transfer of technology and know-how, as well as promoting an active research and development regime through collaborative efforts locally and internationally.

He also maintained that Ghana’s oil and gas industry continues to attract key global players on the back of sustained investor interest, due largely to the favourable investment climate and stable democracy.

“Through benefits of the oil and gas sector, ultimately economic growth can be obtained only when Ghanaians capture a respectable level of running the sector. For a country pushing for self-dependency and Ghana Beyond Aid, this noble call is not misplaced and the time to act is now,” he added.

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