The Minister of Energy, John Peter Amewu has noted that, local participation in the oil and gas sector is increasingly becoming challenging amidst lack of capacity in local firms as oil exploration activities gets deeper and deeper.

According to him, although some success has been chalked, there was the need to encourage more local participation in the oil and gas sector. He however, predicted that, implementation of local content policies could become very challenging in the near future, when
local firms now struggle to make an impact because of their limited capacity.

The Sector Minister further underscored the need to highlight the implementation challenges being faced as country, and also the need to begin to realize that the era of cheap oil is gone, and as International Oil Companies begin to migrate into challenging waters implementation challenges of local content will be visible for everybody to see.

He was speaking at the opening of the two-day 4th Annual Africa Oil Governance Summit 2018, organised by African Centre for Energy Policy (ACEP), dubbed, “Harnessing the Potential of Local Content for Economic Growth and Inclusive Development” From 13th To 14th November, 2018 At The Labadi Beach Hotel in Accra.

The Minister indicated that, “There is a need for improved technology, there is a need to improve skills, and all the items and facilities that are necessary to lift the oil. On this basis, challenges are therefore open and become visible in our attempt to implement local content policies.”

Some of the challenges he underpinned that goes a long way to adversely affect competitiveness in the industry were; lack of finance, human and capital development, technology and many others. “These barriers to local participation, has resulted in over concentration of local companies in the ‘low-hanging fruits’ and less participation in high-value capital and technological intensive services. Another challenge is the inability of indigenous companies to meet international standards, coupled with inadequate certifications,” He revealed.

Mr. Amewu, intimated that, these challenges were partly caused by factors like higher cost of certifying employees and companies, as well as poorly small structured nature of most companies and failure for them to meet competency requirements.

According to him, the IOCs always opt to work with experienced service providers, thus information on tendering processes often goes in favour of international service providers. This he said was due to the limited capacity of local companies to deliver services required, because they lack the required infrastructure to support development of the petroleum industry, limits the volume of work to be carried out in the country.

Mr. Amewu noted that, “It is therefore important to be conversant with the role of information asymmetry in the tendering process. Indigenous companies always receive information on tendering very late as against early notification for international service providers. This state of affairs clearly does not create a level playing field for indigenous companies.”

However, he noted that as of September 2018 there were over 600 indigenous registered companies providing goods and services to the industry. Pointing out that Sankofa Gye Nyame Field, has even awarded over 320 contracts with about US$1.8 billion to indigenous Ghanaian companies, whereas ENI project also awarded about US$6.2 billion worth of deals.

He further revealed that, out of these awards US$1.7 billion were awarded to local firms, which represents 28%.

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