Business News of 2014-02-28

Discretionary powers in local content law worrying – ACEP

The Africa Centre for Energy Policy (ACEP), is expressing concerns about the discretionary powers guaranteed the Minister of Energy and Petroleum by the local content law.

According to the energy policy think tank, the power allowed the Minister to decide persons with minimum equity for licensing might be open for abuse.

Speaking to Citi Business News, the Executive Director of the Centre, Mohammed Amin Adams said: “I know that in some countries such discretionary powers have been abused by politicians and there is the likelihood that our minister of energy can abuse also abuse this provision.”

The Petroleum Regulation on Local Content and participation, sub regulation 4 provides the minimum equity of 5% for indigenous Ghanaian firms in securing a petroleum license and 10% minimum in Service Company.

He explained that there is the need for the enactment of further regulations as guaranteed by article 296 of the constitution to guide the conduct of the minister in the implementation of the local content law.

This comes few days after the implementation of the Petroleum Regulation on Local Content and participation, aimed at promoting value addition and job creation using local expertise.

Mr. Adams is also calling on government to develop innovative ways of funding local oil service providers to compete favourably with their foreign counterparts.

According to President John Mahama, government will give priority to local oil service providers in awarding contracts in the oil and gas industry.

“Government can expand the mandate of the local content fund to help finance these local companies,” Mr. Adams affirmed.

Cabinet is expected to approve the creation of the local content fund soon after efforts by the petroleum commission to have it established.

The Ghana Oil and Gas Service Providers Association (GOGSPA) recently called on the petroleum commission to ensure greater collaboration between local oil service providers and Ghanaian bank.

According to the association, the banks must develop new products for the oil sector to enhance the competiveness of local oil service providers.

The Executive Director of the Association Nuetey Adzeman said Ghanaian banks must be willing to empower the service providers to compete favorably with their foreign counterparts.