Extend oil-tax exemptions to local companies

Government needs to extend to local companies that are trying to make inroads into the oil and gas sector the generous tax exemptions it has given foreign companies in the sector so as to boost the local content agenda, Kwame Macafui, Managing Director of the Macro Group, has said.

“All the foreign companies in the oil and gas industry are given tax exemptions, but we are not given. So if it wants the local companies to grow, the government should commit more into getting the environment a little bit less expensive for us,” Mr. Macafui, whose company provides offshore logistic services for the oil and gas industry, told the B&FT in an interview.

“If I bring in a trailer that costs about US$78,000 and the head costs about €79,000, I pay a duty of US$28,000 for one truck to be on the road; but a foreign company brings the same thing and it doesn’t pay any tax at all,” he said.

While grappling with burdensome taxes, he added, the cost of capital in the country does not make things any easier in an industry that is so capital-intensive.

“Every job we do we need to pre-fund, and it takes a minimum of 30 days for them to pay us. And as you know, the cost of capital is so high and if you have to pre-fund -- marine charges, stevedoring charges, tracking charges, clearing charges -- and deliver the cargo to the client and you wait for 30 to 40 days before you are paid, you can see the cost that we are building up.

“So at the end of the day, the Ghanaian is only working for the banks. We are just working for the banks because if you go for a facility and are paying close to 38% interest on that small money you take, and then you have to wait for 30 days before you get paid -- you can imagine the cost of that money.”

Government has said a lot about building local capacity and getting Ghanaians to participate in “the ownership, operations, control and management” of the oil and gas sector. A legislative instrument to that effect is currently before Parliament. While agreeing that such regulations are important, Kwame Macafui said government has been “so slow” on the whole local content agenda.

“We want to see government much more committed to building the capacity of Ghanaians. There is no way we can build our capacity if we don’t empower the Ghanaians to work and to build themselves up gradually. It is a new industry and we need to learn and keep in line with international standards.”