Business News of 2014-02-24

Petroleum Commission urges commercial banks to reduce interest rates

The Coordinator of Local Content at the Petroleum Commission (PC), Dr Juliette Twumasi-Anokye, has called on commercial banks in Ghana to reduce their interest rates for indigenous companies in the oil and gas industry to derive full benefits from the local content law.

She said, with interest rates of commercial banks hovering around 18 per cent and above, local companies in the oil and gas industry found it difficult to do business.

Dr Twumasi-Anokye, who made the call at a workshop in Accra last Friday, said the implementation of the local content law in Nigeria was smooth because of the low interest rates charged by commercial banks in that country.

She said in some countries, the interest rate charged by commercial banks was as low as six per cent.

The workshop was organised by the Ghana Oil and Gas Service Providers Association (GOGSPA) to educate its members on the Petroleum (Local Content and Local Participation) Regulation, 2013 (LI 2204).

The local content law came into full effect on February 19, 2014, three months after it had been passed by Parliament.

The three-month transitional period was to give the PC and industry players ample time to prepare for the implementation of the law.

Dr Twumasi-Anokye took the participants through the provisions of the local content law, saying the essence of the law was to enable Ghana to get to grips with the oil and gas industry and, subsequently, take over its management.

She said local content was about value addition, human capital development, financial investment and technological know-how.

Dr Twumasi-Anokye said the local content law provided for at least five per cent equity participation of indigenous companies in the oil and gas industry.

In addition, the law requires Ghanaians to hold at least 51 per cent shares, 80 per cent of senior management positions and 100 per cent management staff in local companies.

She cautioned that any Ghanaian who was found fronting for foreign companies would be liable to specified punishment under the law, including a term of imprisonment.

Dr Twumasi-Anokye cited lack of capacity as one of the major challenges that local companies faced in the oil and gas industry.

She said the PC could put in place the requisite legal and regulatory framework, but if local companies did not measure up to the requirements in the industry, “there is nothing we can do.”

Dr Twumasi-Anokye announced that the commission was undertaking a value chain audit to look at all goods and services provided in the industry in order to know what kind of services could be provided locally.

She said the PC would never compromise on the provision of the law that reserved services such as catering in the oil and gas industry to Ghanaian companies.

The President of GOGSPA, Mr Kamil Mohammed, said GOGSPA had facilitated the registration of some of its members with the PC, and urged those who had not done so to avail themselves of the opportunity.