Local content implementation enhancement through infrastructure development in Ghana’s oil and gas industry.

Obiri, Kwadwo Ayeh; Bjeirmi, Bassam; Boateng, Prince

Abstract

Since the discovery in 2007 of oil and gas in commercial quantities, Ghana has made some progress in passing several policies - such as local content and participation framework policies. This is ostensibly to stem the effects of "resource curse", whereby countries with a greater quantity of natural resources are underdeveloped in comparison to those countries with fewer natural resources. Putting it differently, the country's local content policy is meant to stimulate industry development by indigenizing the needs of the petroleum industry. However, this aim is constrained by the country's infrastructure deficit - about $2.5 billion each year - limiting the budget for enabling the growth of indigenous companies. This study proposes policy options for enhancing local content implementation through infrastructure development. To this end, the policy implementations in Angola, Brazil and Norway are reviewed, using a purposively sampled set of research participants for interviewing. The study finds that regulatory institutions and the legal framework should be strengthened in order to attract private investment in infrastructure development. In addition, a special provision should be inserted in future petroleum contracts, so as to support the infrastructure fund - both through infrastructure-for-oil trade and also through encouraging voluntary contributions from oil companies in exchange for reduced taxes. The findings contribute to the existing literature in local content development, moving the discussion away from training, local employment, and goods and services targets, and instead moving towards development of the country's local infrastructure in order to ensure the sustainable development of indigenous and foreign businesses.

Citation

OBIRI, K.A., BJEIRMI, B. and BOATENG, P. 2019. Local content implementation enhancement through infrastructure development in Ghana’s oil and gas industry. Journal of energy research and reviews [online], 3(4), article number 52581. Available from: https://doi.org/10.9734/jenrr/2019/v3i430106

• Journal Article Type: Article
• Acceptance Date: Nov 3, 2019
• Online Publication Date: Nov 7, 2019
• Publication Date: Nov 7, 2019
• Deposit Date: Jan 9, 2020
• Publicly Available Date: Jan 9, 2020
• Journal: Journal of Energy Research and Reviews
• Electronic ISSN: 2581-8368
• Peer Reviewed: Peer Reviewed
• Volume: 3
• Issue: 4
• Article Number: 52581
• DOI: https://doi.org/10.9734/jenrr/2019/v3i430106
• Keywords: Local content policies; Oil and gas industry; Ghana
• Public URL: https://rgu-repository.worktribe.com/output/823828