Foreign companies cannot do business in Ghana’s oil sector without a local partner

Mar 16, 2021 News

By Kiana Wilburg

Kaieteur News – In Ghana, there are several pieces of policies, guidelines, and regulations that protect the interests of citizens in the oil sector. The Local Content Policy and Regulations of that African nation state for example that foreign companies cannot participate in the oil sector to bid for contracts unless they join forces with companies established by Ghanaians.
But those rules go beyond that as Ghana has an additional set of guidelines which ensure that Ghanaians are not merely added to joint venture agreements as window dressing.
According to the guidelines perused by Kaieteur News, “A non-indigenous Ghanaian company which intends to provide goods or services to a contractor, a subcontractor, licensee, the Corporation or other allied entity within the country shall incorporate a joint venture company with an indigenous Ghanaian company and afford that indigenous Ghanaian company an equity participation of at least ten percent.”
Also, “A contractor, subcontractor, licensee or other allied entity shall support and facilitate technology transfer as regards the formation of joint ventures, partnering of licensing agreements between indigenous Ghanaian companies or citizens and foreign contractors and service companies or supply companies.” In the interest of ensuring that this is achieved, Ghana requires the submission of a technology transfer report annually to its Petroleum Commission stating the technology transfer initiatives being pursued and the current results in relation to its Technology Transfer Sub-Plan.
Other rules in place note that the indigenous Ghanaian company/companies must be actively involved in the management and operations of the joint venture company and the management structure of the joint venture company must take into account the equity participation of the parties. Also, the local partners must state, clearly, their roles and responsibilities in the joint venture company.
In accordance with its regulations too, the Commission will closely monitor the activities of each of the parties to the joint venture to ensure effectiveness during and at the end of each contract.
At the moment, Guyana is working on crafting its Local Content Policy which will lay the foundation upon which its ensuing legislation would be built on. The draft document also encourages joint venture partnerships but does not offer the same protections Ghana gives to its citizens.
Kaieteur News would have reported last week that the Ministry of Natural Resources is undertaking a series of “strategic stakeholders’ consultations” to advance the development of the document.
These strategic discussions commenced on March 3 and will conclude on March 19, 2021. During this extended period of discussions, the Ministry said that comments are welcomed regarding all matters addressed under the policy’s vision, mission, and objectives.
Kaieteur News understands that these strategic engagements are focused primarily on the parameters, principles, and pillars of the draft policy, which are needed for the government to consider in defining the participatory measures of Guyanese workers and companies, and on identifying the capacity and competency that exist within the local markets to support oil and gas business development in Guyana.
The Ministry said that the series of consultations will allow it to engage the public sector, private sector and civil society organisations that are involved in various sectors and linkages industries, with particular focus on workforce enhancement such as education agencies; manufacturing and fabrication services; business development and support; financing; audit and accounting; shipping, warehousing and onshore services; hospitality; housing and infrastructure; regional and international trade; and other economic sectors such as tourism, agriculture.

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