To solve some of the problems facing the petroleum sector in Ghana, particularly the participation of local firms in high-value activities, the Minister for Energy has amended the Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I. 2204) with L.I. 2435.
The rationale for the amendment is centered around Regulation 4(6) which provides that “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.”
However, the nature and duration of certain contracts make it difficult to implement local content as envisaged by Regulation 4(6). In addition, there are challenges in the provision of certain types of goods and services under joint venture arrangements. These include short term contracts, contracts executed under emergencies, one-off projects, purchase of software, small value projects, overseas-based contracts and OEM contracts.
The amendments are therefore centered on loosening the requirement of a joint venture for petroleum operations by creating alternative statutory vehicles such as “strategic alliances” and “channel partnerships” for operating in the industry.