Face the reality of local content - Ben Boakye
Benjamin Boakye, Executive Director for the Africa Center for Energy Policy, has advised Ghanaians to decry all the euphoria attendant with the local content law and face the reality of its inherent inconsistencies.
This caution is premised on the context that the country currently is scarce of firms that can and would likely risk such high an amount of the 5% equivalent into exploration, amidst all the risks involved.
Financial constraints, corporate governance and integrity issues, grounds on which local firms are denied partnerships, he said, constitute some of the damning challenges that contribute to the inability of these local companies to make that stake.
Considering the economic terrain of the country at present, he was certain that any local firm that intends to vote the 5% equity would be running an 80% probability of losing out, which is quite high.
Contributing as a panel member at an Imani Ghana Public Lecture on Ghana’s Energy Future in Accra, Wednesday, Ben Boakye iterated the need for government to consider drafting a framework that establishes Ghanaians to have the capacity to produce the 5% of equity in the petroleum upstream sector.
Competence and capacity building of local firms’ overtime, he believed, is imperative to avoid exposing indigenous companies to such risks.
This is to ensure the ultimate goal that Ghanaian companies are capable in the future to venture into upstream exploration and production.
Local content, which genuinely should focus on value creation, is currently fixed on ownership instead. According to Marcia Ashong, Chief Executive of Brace Energy, the debate should be centered on the cumulative value that local content can derive.
“Make local content one of the big parameters in upcoming licensing round,” she advised. She called for a look into all the local content demands; the competency of the firms in question, materials needed and the opportunities for job creation.
According to Dr. Theo Acheampong, an Imani Africa Fellow, supply chain contractors are struggling with restrictive local content obligations. Moreover, there is a lack of skilled workforce, coupled with a disparate training regime that shrouds the appeal of local content.
Mr. Boakye further criticized the apparent lack of coordination between the regulatory bodies in the energy sector; the Energy Commission, the Petroleum Commission and the National Petroleum Authority.
The cause of this inefficiency, he identified, is a desire to control portions of the sector. “We should stop the usual dominance, everyone wants to dominate a segment of the market; NPA has its own enclave, Energy Commission has its enclave, and the Petroleum Commission too, there is no coordination,” he lamented.
A coordinated effort from all the regulatory authorities, with absolute clarity on their regulatory mandates and policy consistency, was indicated by experts as prerequisites for effectiveness in the energy sector.