Oil and gas companies in the upstream sector that consistently breach the local content law risk losing their permits as the Petroleum Commission, the industry’s regulator, looks beyond warnings, fines and refusal of contracts.
“It will not be only fines and refusal of contracts: in instances that we see a pattern of breaches, because some of them feel they have the money to pay fines, we will go beyond that. And if we have to revoke permits, we will do exactly that through the right channels,” said Egbert Faibille, Acting Chief Executive Officer of the Petroleum Commission.
Speaking at the official launch of the Ghana Upstream Petroleum Chamber, an institution established to promote upstream oil and gas exploration and production in Ghana, Mr. Faibille added that at a meeting this week the Commission communicated to some companies which have flouted the local content law that repeated breaches will lead to a revocation of permits.
He disclosed that the Commission has fined over 15 companies with various amounts over the past two years, and the regulator is ready to go further to implement laws that seek to protect and develop Ghanaians.
Ghana’s local content law designed for the oil and gas sector – the Petroleum Local Content Law, LI2204 – gives preference to indigenous Ghanaian companies participating in petroleum activities, including at least five (5) percent equity participation of an indigenous Ghanaian company other than GNPC in all petroleum licences.
It also allows non-indigenous companies to enter into joint venture agreements – at least 10 percent equity participation — with an indigenous Ghanaian company in the provision of goods and services.
Even though it is enshrined in law, Mr. Faibille noted that several companies have flouted the directive – albeit some out of ignorance, and continuous engagement with the industry players has seen some of them reform.
“At the compliance level, I can tell you that in the course of the past two years the Commission has sanctioned various international oil companies as well as service companies – including administrative fines, rejection of recommendations for award of contracts – but we do it also mindful of the fact that we do it with a human face. But where the facts are so glaring, we do not tolerate that at all,” he said.
Charles Darku, Board Chairman of the newly-established Chamber, noted that the Chamber aims to achieve long-term sustainable success in the upstream petroleum industry of Ghana by creating a common platform to promote, protect and enhance common interests.
“We seek to ensure that high standards, best practices, supportive legislation, policies and protocols are adopted; collaborate with government on industry policies and programmes; and ensure a sustained contribution of the industry to the socio-economic development of Ghana,” he said.
Dr. Mohammed Amin Adam, Deputy Minister for Energy, stated that despite the significant gains chalked up over the years in the upstream petroleum sector, the country is still lagging behind when it comes to levels of value addition.
“You cannot expect value addition in these formative years, but I’d like to alert you that all those who have an interest in investing in the industry should know that the future within the industry is value addition. And our policy as a government is now to focus on projects that add value to the Ghanaian economy,” he said.
He assured of government’s support for the platform, and stressed that his ministry will support the chamber’s growth as a sustainable platform to engage on issues which affect the industry.