The Acting Chief Executive Officer for the regulator of Ghana’s Upstream Petroleum sector, Petroleum Commission, Egbert Faibille has express concerns about the conduct of some indigenous companies in the sector thwarting efforts geared towards enhancing local content performance in Ghana’s nascent oil and gas industry
Addresing international and local upstream industry playersat the 2019 Local Content Conference and Exhibition held in Western Region’s city of Takoradi on theme “Maximizing in-country value addition; the role of Indigenous Ghanaian Companies (IGCs) in Joint Ventures in the upstream petroleum Sector”, Mr Faibille Junior stated that his outfit is aware of lapses and infractions caused by some JV’s in the industry. Mr. Faibille Jnr revealed that about 50 percent of joint ventures (JV’s) are not suitably matched in terms of business object and capabilities.
“We are also aware of countless issues relating to misaligned services creating imbalances in most of the existing Joint Venture arrangements and thus becoming convenient grounds for what can simply be referred to as fronting” he warned.
He further stressed that “it is regrettable, since it strongly restricts opportunities for local capacity development and indigenous participation in the upstream business space.
“It is inexcusable, and an affront to the local content policy objectives, and the work of the commission,” he added.
Mr Faibille stated with some confidence that companies engaged in this illegal enterprise have been identified, and the regulator has learnt of most of their strategies so they could be abated.
“Through our monitoring and evaluation department, the Cost Audit Department, as well as the Cost Compliant Department, we have identified most, if not all, of the strategies that they have been used in fronting.The era of fronting is about to end,” he emphasized.
He mentioned that the regulator and other state agencies responsible will, by 2020, intensify checks to ensure strict and full compliance of regulations in the sector.
“Beginning next year, the Commission, working with other state actors including the Registrar General Department and the Ghana Revenue Authority, will begin the enforcement of the relevant laws including tax assessment on the basis of one’s equity participation, and hence profit sharing,” he explained.
He warned that indigenous companies that fall foul of the law, will have their operating permits revoked, and to an extent withhold the issuance of permits to their partners.
He advised that organisations involved in ‘fronting’ must put an end to it.
Source: Ghana/Starrfm.com/103.5FM/Emmanuel Ohene-Gyan