oil and gas industry

By Francis Tandoh

The Public Interest and Accountability Committee (PIAC) has expressed worry over the Ghana government?s seemingly failure to develop the capacity of indigenes in the oil and gas industry.oil and gas industry
Member of the PIAC, Yaw Owusu Addo told spyGhana.com?in an interview such a development is not healthy for the country as huge sums of money would be needed to pay expatriates to do jobs that the locals could be trained to do.
Ghana has been undertaking the production of oil in commercial quantities since November 2010 and Addo observes a token of monies allocated to capacity building has actually been used to train Ghanaians in the oil and gas industry.
The country?s Petroleum Revenue Management Act 2011 (PRMA), Act 815 talks of a local content aspect meant to develop the capacity of the locals to take up the oil and gas business in future.
The country?s Local Content and Local Participation Bill was passed in November 2013 by the Ghanaian Parliament.
The bill, Legislative Instrument (LI) 2204 seeks to ?promote the maximization of value-addition and job creation through the use of local expertise, goods and services, business 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 programs.
Others are to achieve the minimum local employment level?and in-country spend for the provision of the goods and services in the petroleum industry value chain; increase the capability and international competitiveness of domestic businesses; and achieve and attain a degree of control for Ghanaians over development initiatives for local stakeholders.?
The law also requires that a ?contractor, sub-contractor, licensee, the corporation or other allied entity carrying out a petroleum activity shall ensure that local content is a component of the petroleum activities engaged in by that contractor, sub-contractor and licensee, the corporation or allied entity?; and that ?an indigenous Ghanaian company shall be given first preference in the grant of a petroleum agreement or a license with respect to petroleum activities subject to the fulfilment of the conditions specified in the regulations.?
The bill also requires that ?there shall be at least a five percent equity participation of an indigenous Ghanaian company other than the corporation to be qualified to enter into petroleum agreement or a petroleum license.?
Addo says, ?So far the monies that we have allocated for capacity building which is meant to build the capacity of the Ghanaian so that he can take advantage with what the government itself has been calling local content aspect of the oil industry is small.
The money is meant to train our people; our welders, our masons and artisans in general so that they can build gas infrastructure, weld pipes that will carry the gas among others. This is what the capacity building money is meant for.?
The country received total petroleum revenue of 846, 767,184 US dollars in 2013 bringing cumulative revenue received since 2011 to 1.833 billion dollars.
Section 21(5) of the country?s PRMA requires the Finance Minister to prioritize not more than four areas to benefit from the use of the Annual Budget Funding Amount (ABFA), in the absence of a long term national development plan, with the view to maximizing the impact of petroleum revenues.
Furthermore, section 21(6) of the law mandates initial prioritization to remain in force for a minimum of 3 years before it would be subject to review.
In accordance with that, Ghana?s Parliament in 2011 approved the use of the ABFA for the following four priority areas for the period 2011-2013; expenditure and amortization of loans for oil and gas infrastructure, agriculture modernization, roads and other infrastructure and capacity building (including oil and gas).
Out of total amount of 1,322,156,933 cedis or 413,174,042 US dollars allocated to the ABFA between 2011-2013, 132,893,097 cedis or 41,529,093 US dollars representing 10.05 percent has gone into capacity building.
The PIAC Member further expressed concern over the misapplication of oil revenue to projects not captured in the Ghana government?s priority areas as stipulated in the law and called for an end to the practice.
?I can disclose that since the allocations began, only 6.7 percent of that amount has actually gone into building the capacity of the Ghanaian, the rest has gone into programs like Microfinance and Small Loans Center (MASLOC), the National Disaster Management Organization (NADMO), Ministry of Lands and Natural Resources (MLNR), Ministry of Food and Agriculture (MoFA), Venture Capital, Livelihood Empowerment Against Poverty (LEAP) program.
Those things are what we have spent money meant for building the capacity of the Ghanaian so that he can participate in the oil industry. This money should have been in the universities and the polytechnics to be training our welders, our masons, artisans in general so they can go and compete with foreigners whom we are paying so high to do that same work,? Addo emphasized.
The PIAC in its 2013 Annual Report notes that the capacity building priority area appears to be a category under which some expenditure which may not be related to capacity building has been classified.
According to the report, 8.93 million cedis or 2,790,625 US dollars representing 6.7 percent of the total allocations to the capacity building priority area has gone into developing capacity in the oil and gas sector over the 3 year period between 2011 and 2013.
Approximately, 23 million cedis or 7,187.5 US dollars representing 17 percent of ABFA earmarked for capacity building between 2011-2013 went into consumables such as ?goods and services for MoFA and MLNR, NADMO relief items.
Two million cedis or 625,000 US dollars was used to support the creative industry while another 8.1 million cedis or 253, 125 US dollars was given out as cash transfer under the LEAP.
Thirty-five million cedis or 10,937,500 have been pumped into MASLOC while another 19 million cedis or 5,937,500 US dollars has been used to set up Venture Capital Fund and Exim Guarantee Fund with the Petroleum Commission receiving support of 8.18 million US dollars in 2013.
Executive Director of the African Center for Energy Policy (ACEP), Dr. Mohammed Amin Adam shares in the opinion of the PIAC emphasizing that the Ghana government has violated section 48(2) of the PRMA.
?As an oil producing country, it is not good to make laws and break such laws. We have to prioritize spending our oil money. This is not the way to spend our oil money,? he remarked.

Source: spyGhana.com

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