Discovery of oil - Production materials must be sourced locally

Business (lead) Feb 29/2008

Story: Charles Benoni Okine

THE President of the Association of Ghana Industries (AGI), Mr Tony Oteng-Gyasi, has called for a legislation that will make it mandatory for foreign companies working in the oil production areas of the country to source some of their materials from local industries.
“Local industries have to benefit from the oil that we have here and we can only benefit if the local content legislation was passed to compel the foreign companies to source some of their materials from the country”, he said.
Mr Oteng-Gyasi made the call in an interview with the Daily Graphic in Accra at the just-ended national oil and gas forum in Accra.
The two-day forum, attended by experts in many areas of oil exploration, was organised along four major themes: “Turning Oil and Gas Wealth into Sustainable and Equitable Development”, “Entrenching Transparency and Stakeholder Engagement”, “Effective Management of the Oil and Gas Sector” and “Safeguarding Security and the Environment”.
It was called at the instance of President Kufuor to find ways to manage and use Ghana’s oil after Kosmos Energy and its partners had struck oil in the West Cape Three Points of the Tano Basin of the Western Region of the country.
There had been issues raised concerning local content by some participants when they made their contributions saying that the oil find was a fine opportunity for the local industries to grow into very formidable companies.
According to them although many industries in the country produce high quality products that could be used by the foreign companies in the mining sector, there is no legislation that binds them to source some of their products from the country.
It was against this background that Mr Oteng-Gyasi said the country need not be an island where foreign companies would come with their own materials which they sourced from their countries when most of such materials could have been bought from the country at less cost.
According to him, such a practice prevails in the mining industry and should not be allowed to continue when the various legislations governing the management and use of oil resources in the country get drafted.
“We should not forget about this local content issue because the local communities also need to benefit from the find in their own way”, he added.
Mr Oteng-Gyasi cited Nigeria as an example where he said “that country used to invest about $10 billion annually in the oil sector but virtually nothing went to the local industry in the past”.
He was of the view that the time had come for Ghana to remedy the wrongs of the past. He was hopeful that with the suggestions made from the forum, the government would not turn a blind eye to the various suggestions among which the issue of local content was paramount.
Earlier during his intervention at the forum, the AGI President called for the formulation of a schedule of training programmes for the insurance, banking, manufacturing and other financial sectors of the economy regarding oil and gas.
That, he said, was necessary to position them for good business when production of oil and gas began in the country in earnest.
In the area of joint venture, he said measures needed to be put in place to ensure that such ventures were verifiable and not the types that would allow Ghanaians only to front for foreign companies.
He said issues of such nature must be taken seriously to ensure that Ghana really benefited from the find.
On the AGI itself, he said the association was positioning itself to be able to capitalise fully on the benefits from the find.
He added that some of the experts who spoke but could not exhaust their papers due to time constraints, had been invited to the AGI business forums to share their views with members.