Catching Up

Nana Yaa Ofori Atta

Headline news announced by the Minister of Finance, Ken Ofori-Atta in his budget statement, is that Ghana expects to earn some $670 million from exporting crude oil in 2018 from its 3 major producing fields.  There may well be other tangible benefits.

The 2018 budget was themed ‘Putting Ghana back to work.’  Making quiet waves in the wake of this announcement, are the current moves being made by the Petroleum Commission (PC), regulator of the upstream industry in Ghana.  The PC is playing catch up, quickly, with intent.

In the first 2 months of 2018, the PC received 862 work permit applications from 18 companies, most of the applications were for the category of positions expressly reserved for Ghanaians.

Just in case there are doubts or there has been miscommunication in the past, 5 years after the Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I. 2204), the PC has clarified with a 20 point Guidelines  on the Employment and Training of Ghanaians And Succession Plans for Expatriate Positions.  Effective June 1, 2018.

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Agreements are binding

In L.I. 2204, Ghana set out the following schedule of Minimum Local Content  levels of employment to be delivered from the effective date of a Licence or Agreement.

Recruitment & Training Start 5 Years 10 Years
Management staff 30.00% 50-60% 70-80%
Technical core staff 20.00% 50-60% 70-80%
Other staff 80.00% 90.00% 100.00%

 

The catch all rules of the new Guidelines, apply to international oil companies, international and local service providers, contractors, subcontractors, licensees and allied entities in the industry.

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Guidelines

The first schedule of the Guidelines requires that ‘to all extents possible, give employment opportunities to Ghanaians with the requisite expertise, skills and experience’.  Given that the oil and gas industry is Ghana is fairly new, health and safety standards are high, employers say finding qualified Ghanaians is a difficult ask.

The Guidelines reiteration that only Ghanaians are to be employed in junior or middle level positions is hardly news.  What is tricky is the definition of ‘junior or middle level’ jobs across the industry.  The PC intends to mark out these boundaries definitively in one of its next 2 Guidelines. 

The PC now requires that each vacant position with a full job description, qualifications and certification required be submitted at least 3 clear months before the intended start of the recruitment drive.  The search for qualified Ghanaians by companies can be online or through other means however it must be advertised for a minimum of one week in 2 newspapers with national circulation.

On paper, there are more than 130 newspapers in Ghana, in reality less than 40 of these are published, some irregularly.  It is likely that only the state owned Daily Graphic and Ghanaian Times, they are distributed nationally, will benefit from the mandatory advertisements from the industry.

The PC requires that companies notify it when interviews of candidates are to be conducted, it may choose to sit in as an observer.  It has been suggested that virtual monitoring may be more efficient than a surprise physical visit.

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Matters Expatriate

The Guidelines require that where in spite of the advertised search by the companies, a technically competent and experienced Ghanaian is not found, the companies submit copies of the advertisement, the resumes and transcripts of the interviews of applicants to it for review.

The PC will communicate if the company then qualifies to apply for a work permit for an expatriate to fill that particular role. 

Employment of an expatriate to fill the role is required in writing at least 3 months before the person is taken on.  However, the PC recognises that emergencies and other justifiable needs do arise and it will consider a waiver to the 3 month rule to enable an application for a work permit for a qualified expatriate.

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In the Pipeline

There is an all important Nota Bene.  The PC’s waiver comes with a non negotiable condition.  In exchange for its work permit waiver, the company must identify a Ghanaian successor to the expatriate and provide a detailed training and coaching plan with a dedicated budget allocation to ensure that the role is actually eventually localised within a specified time.

The Guidelines now link compliance to work permits.  They require that the succession plans are reviewed quarterly.  If there is a need to alter or extend the succession plan or the original identified Ghanaian successor, the PC must formally approve.  Without which, it reserves the right to refuse to renew work permit applications.

The Guidelines require that further to the mandatory conditions of licenses and agreements, companies in the upstream petroleum industry submit for approval detailed training plans for all Ghanaian citizens in their employ as well as qualified locals who are not yet in its employ

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Compliance is trending

The regulator has also turned its attention to the development of value chains by the upstream industry.  Companies who win contracts have previously projected their annual spend in the local economy.  The PC has established a new Local Content Audit Unit whose mandate is now to vet and validate on a monthly basis all receipts and claims of payment for goods and services in Ghana by the industry.

The Acting Chief Executive Officer of the PC, Egbert Faibille Jnr said in a speech delivered at the maiden Localisation workshop held in Accra “We are moving local content from subjective claims to verifiable and quantifiable levels for the benefit of the economy.”

The impending Guidelines on Salaries and Renumeration in the upstream industry will be be an interesting discussion.  Faibille said “Yes!  There is a justification to pay expats “premiums” but as far as all such payments end up as “petroleum costs” to be passed on to the Ghanaian to pay in the future, we ought to have that regime properly defined for the mutual benefit of all stakeholders.”

 

Merriam-Webster’s definition of playing catch up: to try to reach the same position, score, etc., as a competitor after one has fallen behind.  June 1, 2018  may well be the starting whistle of the PC finally catching up. 5 years after the fact, with the reality and challenges of managing compliance and governance backed by law, with encouraging further investment including in technology, skills people and performance, in the upstream petroleum industry in Ghana.