Ghana Takes Strides to Localize its Petroleum Industry

John Atta Mills, former president of Ghana, turns on a valve at the Jubilee offshore oil fields.

John Atta Mills, former president of Ghana, turns on a valve at the Jubilee offshore oil fields.

The discovery of vast oil reserves in Ghana in 2007 and the beginning of commercial production by Tullow Oil in 2010 have provided a significant boost to the nation’s economy and opened up a host of new opportunities for both domestic growth and foreign investment.

 

Floating storage production storage vessel the Kwame Nkrumah

A Tullow oil rig in the offshore Jubilee oil field.

 

Many have posited that Ghana is better-positioned than other oil-wealthy nations to manage their petroleum resources well because they do not rely on oil exclusively for national income. The newly discovered oil reserves are significant, but the revenue they generated still only represented 6% of GDP in 2010, as Ghana also earns significant portions of GDP from gold and cocoa production.

There is a potential for thousands of new jobs within the industry, but previously, many had gone to foreigners. To remedy this, the Petroleum Regulation on Local Content and Participation was entered into force on February 1st, 2014.  Under this new legislation, Ghanaian companies must have a 5% stake or higher in every contract with foreign investors, and Ghanaian businesses are given priority in applications for petroleum licenses. Foreign investors will also need to use predominantly local resources and services for all of their operations. The legislation also includes provisions requiring companies to invest in research and programs to facilitate technology transfer and foster greater local capacity for industrial development.      The country experienced an unprecedented 13.4% growth rate in 2011, but greater local participation in the industry would mean that this growth directly impacts more Ghanaian citizens rather than foreign investors. This bill is the first step in a long-range program to transition to predominantly local participation in and administration of the industry, with an ultimate goal of 90% Ghanaian participation by 2020.

 

A man fill a truck with diesel fuel at a gas station in Accra, Ghana

 

However, in order for this to be a smooth and successful transition, comprehensive capacity-building and human resource development strategies must also be initiated, as local industry expertise remains in short supply. Currently, many Ghanaian firms related to different stages in the petroleum production industry are small, and most of them tend to specialize in on-shore services. A few capacity-building plans that have been suggested are for international contractors to subcontract more tasks to local firms, and for small, highly specialized firms to join forces to be able to take on larger jobs.

Potential problems include government corruption, appropriation of resources for sale on the black market, and several negative impacts on fisheries–from pollution at drilling sites, sound pollution that drives fish away, and a danger to fishermen when nets or boats are pulled under near drills. However, steps are being taken to address these issues at both the grassroots and the governmental levels, and Ghana is optimistic that this localization of the petroleum industry will translate into an economic boost that will have a positive impact on many in the country.

 

 

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President of Ghana Appeals to the UN for Partnership in Africa

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The President of Ghana, John Dramani Mahama, in his address to the United Nations General Assembly on September 23rd, has asked the asked that the world stop sympathizing with Africa, and instead offer partnership.He has emphasized the necessity for Africa to build up its economy by increasing the worth on its exportable goods. He states, “We need to add value to our natural resources by setting up industries in our countries that will add these values.”

Mahama urges other nations, particularly those in the West, to accept that Africa does not need to be handed money and aid. Rather, Africa needs nations to connect with on an economic level. He assures the United Nations that through endurance- and a sustainable economic partnership- Africa will thrive. Between 1980 and 2012, Ghana’s Human Development Index (HDI), which measures development through life expectancy, educational attainment, and income, rose by .9% annually to .558. In addition, the HDI for the Sub-Saharan region of Africa has risen to .475.See HDI Source: http://hdrstats.undp.org/en/countries/profiles/GHA.html

“It’s not sympathy we want; it’s partnership, the ability to stand on our own feet. It’s not handouts we’re in search of; its opportunities. We have already shown that with time and the right opportunity, Africa can make it.”
See Article Source: http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=287047

 

Ghanaian Government Cracks Down on Illegal Mining

A recent wave of arrests has marked an increased effort by the Ghanaian government to clamp down on foreign illegal mining. Pressure by local artisan miners, who feel threatened by the scale and veracity of the predominantly Chinese operations, together with increased concerns over the environmental effects of their mining practices have led government officials to order detentions of foreign workers throughout the country.

Ghanaian Police forces have arrested a total of 161 Chinese citizens, many of whom crossed borders from neighboring countries in order to bypass immigration authorities. The arrests were focused in the Ashanti region, long known for its rich gold deposits. The region has been mined for decades by local artisans with very little equipment and traditional, low impact methods. The arrival of the Chinese, however, has marked a shift towards medium scale operations that have a greater impact on the land and local business.

According to the Bank of Ghana, in 2011 the country made 4.9bn from gold exports. The economy as a whole has been growing at one of the fastest paces on the continent (7.9 % in 2012). The arrests, which aim at protecting the interests of the local miners, are creating a bitter dispute  with workers of one of Ghana’s most important trading partners. The Chinese, who are keen on maintaining a privileged trading status with the African country, have already agreed to pay bail and fines for breaking the country’s immigration laws. Authority’s in the Guangxi region, where many of the Chinese workers reside, are currently urging people not to go to Ghana to work in Gold mines.

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Earthmoving equipment at a mine in Africa. Photo: AFP

In general, Chinese authorities are urging Chinese workers to respect the laws of the host country and are determined to work with Ghanaian authorities to settle the issue.

While Chinese officials are keen on maintaining good relations with Ghana, the arrested workers have been more outspoken in regards to the nature of their arrest. Ghanaian policeman have been described raiding camps, mines, hotels and any place where the foreign workers gather. In the opinion of the workers, their methods have not been ‘gentle’. Many of the arrested Chinese citizens have described the process as hastened and in some cases coercive, alleging to stolen cash and stolen car keys.

Nonetheless, the clampdown has earned the Ghanaian government praises from Global Rights, a leading global human rights organization. According to the NGO, Ghana’s recent crackdown on illegal miners, particularly the foreign illegal ones, was a step in the right direction. The Global Rights’ Country Director for West Africa, Mrs. Abiodun Baiyewu said the arrests ” Will create a comprehensive atmosphere for trade and investment in Ghana thereby boosting investor confidence. The VPs will further ensure constant dialogue among extractive host communities, the government, and the mining companies thereby ensuring that the interests of all stakeholders are protected”.

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