Ghana imposes fine, jail time for local content deception

Mar 21, 2021 News

By Kiana Wilburg

Kaieteur News – In Ghana, citizens are afforded a number of opportunities to reap the maximum benefits from their oil resources, thanks to a suite of robust guidelines, policies, and regulations that protect their interest. The legislative framework ensures, for example, that any foreigner who desires to set up shop and bid for contracts can only do so if they partner with locals. Moreover, for those who even contemplate effecting schemes to cheat the system, Ghana was keen to have clear-cut fines and jail time stipulated for such actions.
The Local Content Regulations of that African nation state, for example, “A citizen who acts as a front or connives with a foreign citizen or company to deceive the Commission as representing an indigenous Ghanaian company to achieve the local content requirement under these Regulations, commits an offence and is liable on summary conviction to a fine of not less than one hundred thousand penalty units and not more than two hundred and fifty thousand penalty units or to a term of imprisonment of not less than one year and not more than two years or to both.”
It also notes, “A person who connives with a citizen or an indigenous Ghanaian company to deceive the Commission as representing an indigenous Ghanaian company to achieve the local content requirement under these Regulations, commits an offence and is liable on summary conviction to a fine of not less than one hundred thousand penalty units and not more than two hundred and fifty thousand penalty units or to a term of imprisonment of not less than one year and not more than two years or to both.”
It is instructive to note as well, that anyone who knowingly submits false documents and makes false statements to Ghana’s Commission along with fronting for a foreign individual or a company to give the impression that local content is being achieved, would also have to face the proverbial music.
Ghana’s regulations in this regard specifically states that, “A person who submits a plan, returns, report or other document and knowingly makes a false statement, commits an offence and is liable on summary conviction to a fine of not less than one hundred thousand penalty units and not more than two hundred and fifty thousand penalty units or to a term of imprisonment of not less than two years and not more than five years or to both.”

GUYANA’S EFFORTS
Since last year August, the PPP/C Administration pursued several efforts to have a draft Local Content Policy available for consultation. That process kicked off in February last and saw several strategic discussions held with stakeholders on key provisions that are critical to giving Guyanese similar opportunities to have maximum participation and benefits in the sector.
It is important to that the draft document, which was perused by Kaieteur News, did not indicate that there should or would be penalties or any form of punishment for those who engage in various forms of local content deception.
Be that as it may, the draft document proposes that there be targets for local content. It is envisioned, by the government that these will be progressive to reflect the changing state of the domestic supply base and demand going forward.
The draft document proposes that companies should have up to five to seven years to ensure supervisory staff, technical core staff, professional support staff, and semi-skilled and unskilled workers, more than 50 to 60 percent Guyanese and 10 years to get management staff at least 45 percent local. This is for upstream oil businesses such as those involved in exploration, drilling, and extraction of the petroleum resources.
Targets are also set for companies in the midstream and downstream aspects of the oil industry. Midstream companies are those involved in the wholesale transport, storage and marketing of raw or refined petroleum products. Downstream businesses are involved in converting oil and gas into finished products. These include refining crude oil into gasoline, natural gas liquids, diesel, and a variety of other energy sources.
The draft policy proposes that these companies have up to seven years to ensure that the employment of local people for their supervisory staff, technical core staff, professional support staff, and a semi-skilled and unskilled workforce exceeds 60 to 80 percent. They have up to 10 years to go beyond that.

The draft policy also states that Guyanese must be given opportunities to provide services in the areas of:
1) Front-end Engineering Design (FEED)
2) Fabrication, Construction and Storage
3) Procurement of Materials
4) Research and development related to services in the country
5) Transportation, delivery and disposal services
6) Good drilling services
7) Health, safety and environment services
8) Information systems, information technology and communications services
9) Marine operations and logistics services
10) Financial and insurance activities.
For further benefit to Guyanese businesses, the draft policy recommends that contracts be unbundled to reflect state potential and local market growth; market conditioning, including early notification of planned activities; favorable treatment of local people; contract management with supplier performance improvement strategies.
It also recommends facilitating partnerships between Guyanese and international suppliers; provide contract terms that facilitate access to competitive finance; opportunities to learn and increase transparency and accountability for procurement decision making; measure and report on local content policy implementation and achievements; along with benchmarking, sharing of best practice and continuous improvement.