Ghana’s energy industry promotes transparencyJanuary 16, 2019
Hellen Kpeglar, one of the directors of Ghana Oil Club (GOC), talks to TOGY about the importance of transparency and accountability in the oil and gas industry, the role of technical education and strategies for local participation in the services sector. The GOC was founded in September 2010 as a forum for oil and gas and energy professionals to share knowledge about the industry.
• On accountability: “If we want to escape from resource curse, transparency and accountability are key. Transparency allows citizens to hold public officials accountable for pursuing policies that lead to widely shared benefits. Accountability may be hindered by political backroom dealing. External support is therefore needed to encourage companies to abide by disclosure and anti-corruption rules.”
• On investment: “With an increase in investor confidence in the country, I look forward to new oil and gas companies entering Ghana. When new companies enter Ghana, competition is created and the quality of production is improved.”
• On local content: “The cumbersome procedure in bidding for a contract in the oil and gas industry is the main issue that affects local content.”
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What is the best way to ensure that Ghana does not become a victim of the resource curse with similar effects as in Nigeria, Angola or Equatorial Guinea?
The abundance of natural resources is usually considered a blessing for the countries that own them. In recent years countries endowed with resource blessings have continuously underperformed compared with the natural resource-poor countries on most indicators of progress.
With the discovery of oil in commercial quantities in 2007, an economy that makes wealth accruing from petroleum – beneficial to Ghanaians in general through private sector development, employment generation and investments – was created. Consequently, Ghanaians became apprehensive about the spectre of the resource curse.
I believe that if we want to escape from resource curse, transparency and accountability are key. Transparency allows citizens to hold public officials accountable for pursuing policies that lead to widely shared benefits. Accountability may be hindered by political backroom dealing. External support is therefore needed to encourage companies to abide by disclosure and anti-corruption rules.
In so doing, Ghana is doing very well in the regulatory aspects of the industry. We have a good metering system; we have an inspection system. The government, through an enactment by Parliament – the Petroleum Commission Act, 2011 (Act 821) – established a regulatory body known as the Petroleum Commission. The object of the commission is to regulate the management of petroleum resources and to co-ordinate associated policies.
Oil and gas companies also need to work on integrating the Sustainable Development Goals [SDGs] in their operations. We need oil and gas companies who adhere to the law, respect human rights and minimise the negative impacts of their operations. Companies can contribute to the SDGs by understanding and prioritising them, and then aligning operations with the goals. Corporate social responsibility is also key for Ghana in averting the resource curse.
GOC looks forward to partnering with civil society organisations and development partners who can provide financial, technical, managerial and capacity-building support to other stakeholders and underrepresented segments of society on the strategies for achieving the SDG goals, disseminating information to the public and helping to form multi-stakeholder partnerships in collaboration with the GOC.
Does there need to be more education from the ground up in the oil and gas industry?
There should be some focus on that. Engineering is more needed, in my opinion. Some of our universities teach petroleum-related courses. Recently the government also established the university of natural resources.
Are policies on the engagement of local people in the oil and gas industry in Ghana too complex?
Following the 2007 oil find, pressure was mounted on the government by civil society organisations and the populace in general for a local content policy for the oil and gas sector. The local content law aims at ensuring capacity development in terms of employment of Ghanaians, use of Ghanaian goods and services, transfer of technology and know-how, and indigenisation of knowledge and ownership.
The substantive legislation on local content is set out in the Petroleum (Local Content and Local Participation) Regulations, 2013 (LI 2204). The legislation focuses on five main areas: employment and training of nationals, local industries/goods and services, research and development, technology transfer, and compliance and enforcement.
The cumbersome procedure in bidding for a contract in the oil and gas industry is the main issue that affects local content. Most local companies also fail to undertake due diligence before tendering for contracts. They fail to identify that for a particular service, it is necessary to identify, for instance, their competitors and opportunities. It is necessary for local companies to do a proper assessment before bidding for a contract.
Do you expect to see more new oil and gas companies entering Ghana during 2019 and the coming years?
With an increase in investor confidence in the country, I look forward to new oil and gas companies entering Ghana. When new companies enter Ghana, competition is created and the quality of production is improved. They must look out for requirements set out by the law and the Petroleum Commission for a new entrant into the industry, e.g. health and safety requirements and local content regulations. Services provided must also be of high quality and on schedule.