As the sun set at about 17:23pm in the small fishing community of Abuesi near Takoradi, Yaw Yankey, a 42-year-old wielder assembly his tools to round up the day?s work, dispatch his four apprentices, board a public transport locally referred to as Trotro and head back home to his family who live in a two bedroom single wooden structure at Shama junction.
He tells me that making earns meet has been a struggle for some time now and wonders whether he can take advantage of the oil discovery to better his life through his trade.
He complains that business is not booming and for that matter he is thinking of re-locating to Accra, Ghana?s capital in order to make more money to take care of his wife and two children.
?Why should I continue to work here when all their promises of helping us to get a job in the oil industry has failed??
As we part company, the question that hit me hard is would there ever be opportunity for members of communities close to Ghana?s oil find, to take advantage of the oil find and do legitimate business in the midst of competition?
Ghana?s Petroleum (local content and local participation) regulations, 2013 was passed to among other things to:
- promote the maximization of value-addition and job creation through the use of local expertise, goods and services, businesses and financing in the petroleum industry value chain and their retention in the country;
- develop local capacities in the petroleum industry value chain through education, skills transfer and expertise development, transfer of technology and know-how and active research and development programmes;
- achieve the minimum local employment level and in country spend for the provision of the goods and services in the petroleum industry value chain as specified in the First Schedule;
- increase the capability and international competitiveness of domestic businesses;
- create petroleum and related supportive industries that will sustain economic development;
- achieve and maintain a degree of control for Ghanaians over development initiatives for local stakeholders;
- provide for a robust and transparent monitoring and reporting system to ensure delivery of local content policy objectives;
- provide for the submission of the local content plan and related sub-plans by contractors, subcontractors, licensees and any other allied entity involved in the petroleum industry including
- the provision of goods and services; (ii)the transfer to the Corporation or the Commission and Ghanaians of advanced technology and skills related to petroleum activities; (iii) a recruitment and training programme;
An indigenous Ghanaian company is expected to be given first preference in the grant of a petroleum agreement or a license with respect to petroleum activities subject to the fulfillment of conditions specified in these regulations. But how protective is this law for local participation?
Speaking exclusively to this reporter, Dr. Mohammed Amin Adam, the Executive Director of the Africa Centre for Energy Policy (ACEP) said that ?fronting is usually not stated anywhere in contracts but if a company can hold up 38 per cent and it has no money and its performance is guaranteed by another company, it is fronting.?
A critical look at the oil contract between GNPC Exploration and Production Company Limited and Heritage Oil Plc, Bluestar Exploration Ghana Limited reveals that Heritage Oil Plc and Bluestar Exploration Ghana Limited have an arrangement in which Heritage the parent company has guaranteed to cover all of Bluestar?s performance obligation for the duration of the Petroleum Agreement.
Of significance to Contractor?s financial capabilities, the Qatari Sovereign Wealth Fund acquired a significant interest in Heritage Oil. Qatar is well known as strong natural gas producing country. They bring significant financing capabilities to this project. Heritage and Blue STAR have agreed an arrangement in which the Heritage parent company would guarantee the performance obligations of Blue STAR.
Adam said that, ?international companies usually carry local companies through by financing all their obligations and when they make discovery they say that this is when we need our block so it is sold to them. Beneficial ownership information is important in all this.?
According to him, ?even though we have the local content law in place, what we are seeing now is that are Ghanaian companies that have no track record that have no financial capacity, so it tells you that once another company is guaranteeing their performance, then they are fronting.?
Adding his voice to the subject matter, Dr. Steve Manteaw, a Campaign Coordinator of Integrated Social Development Centre (ISODEC) and also the Vice Chairman of the Ghana Extractive Industry Transparency Initiative (GHEITI) revealed that, ?if you look at the structure of Kosmos ownership, you will find out that, E. Adusei formed the company EO Group and was assigned three point five (3.5) per cent share in Kosmos. But there is no evidence that they paid in this stake.
Then you have Tullow Oil where certain Sabre oil also is assigned a percentage it did not pay for. I had the opportunity of raising and pointing this out to a former Energy minister and then he pointed to me in a certain direction where in the AFREN contract, where a certain Joe Ofori was assigned two (2) per cent stake he did not pay.
All these looked like a conspiracy to short change Ghana.?
It is believed that the issue of fronting led to the sale of Sabre and EO Group which where owned by Ghanaians.
An article in a local Daily Guide newspaper on 17 September reported that, Ghana has realized about $580 million from the Local Content policy.
It quoted Emmanuel Armah-Kofi Buah, the Minister of Energy & Petroleum, as saying that, there has been a ?significant improvement in the award of contracts? since the start of the commercial production of oil.
About 152 Ghanaian companies offering catering, logistics and freight forwarding and waste management services out of 232 have registered with the Petroleum Commission to provide direct and indirect services to operators in the upstream industry.
As at December 2013, a total number of 6,929 personnel were employed in the petroleum upstream sector. They consist of 5,589 Ghanaians and 1,340 expatriates, representing approximately 80 percent and 20 percent respectively.
It is only Ghanaians who can work in the industry. The foreigners are working there because we do not have the expertise, Buah is quoted as saying.
Many artisans risk losing their jobs and many local companies also risk folding up because of the practice of fronting.
There is enough evidence pointing to the fact that fronting is taking over Ghana?s oil in the award of blocks. Oil blocks are awarded to Ghanaians without or with due diligence who later sell all their stake to foreigners and pocket the money at the detriment of developing the capacity of the Ghanaian to play active role in its oil and gas industry and further create possible upheavals in future of disgruntled generation yet unborn.
Fronting could lead to capital flight that could in effect create problems for Ghana?s economy. It could also lead to low participation of Ghanaians in the oil and gas sector.
Development is about people and if the people for whom development is being undertaken are not happy about a particular development project then there is a big issue that must be addressed.
Story by Pascal Kudiabor
