LCP Law Delay Can Cause Complications

- Says University of Mines V.C.

…Calls for Extension of Law to Mining Sector

By J. Ato Kobbie & Latifah Funke Ibrahim

Prof Daniel Mireku-Gyimah, an Oil and Gas expert has reiterated the need for government to pass the Local Content and Participation (LCP) Bill into law as soon as possible, to avoid future complications that may arise with an attempt to get oil and gas companies act in compliance with the law.

He explained that majority of the employment and business transactions currently ongoing in the young petroleum industry of Ghana were on contractual basis and would be difficult to revert or adjust to meet requirements of the LCP Bill, when finally passed.
“If non-Ghanaians have been contracted as employees and non-Ghanaian companies have been contracted to supply goods and services by the oil companies, it will not be easy to terminate such contracts (when the LCP law comes into effect) until the contracts expire,” he added.
Professor Mireku-Gyimah, who is Vice Chancellor of the University of Mines, Tarkwa, was speaking at the International Conference on ‘the Avoidance of the Oil Curse in Ghana’ on the topic ‘Impact of Oil and Gas Discovery and Exploitation in Ghana- the Local Content and Participation and their Management’, organised by the National Development Planning Commission together with the Ministry of Energy in Koforidua from November 24 to 27, 2011.
He admitted that although the policy framework demonstrated government’s commitment to ensuring high LCP in the oil and gas industry with the policy directions amply covering the areas of interest, government however, needed to speed things up and educate the public about it as soon as possible since oil production in the country is a year old, otherwise enforcement of, and compliance with, the law could become complicated.
He highlighted also on the need to intensify and accelerate the development of the local capability in all aspects of the oil and gas industry before the LCP law comes into effect, saying that the lack of that could pose problems in enforcing the law.
“When it comes to marketing, management, financial administration, legal practice and the like, Ghana has some local capability. Attention should be given to the development of vocational, technical, engineering and technology skills,” he said.
He called also for the urgent need to properly equip the vocational, technical, science and engineering institutions and universities so they could provide the needed training for quality human resource, in addition to giving special attention to active research in the universities.
Prof. Mireku-Gyimah highlighted on developments in the mining sector, which he said should serve as lessons for expedited action and seriousness in building local capacity.
He explained that the Ghanaian mining industry, which dates back to the 15th century and has witnessed a significant amount of growth with over 200 mining companies holding various prospecting and/or mining licenses in the country currently, is yet to impact the nation’s economy positively to its full potential.
With minerals like gold, diamond, bauxite, manganese, granite salt and sand currently being mined and with deposits of iron, marble, asbestos, chromite, limestone, copper, kaolin, beryl, lithium, talc and silica among others yet to be exploited, Prof. Mireku-Gyimah believed that Ghana’s mining industry undoubtedly would continue to grow.
LCP in Mining
He however feared that it would mean little to the overall national economy with the current status of the LCP in the industry, adding “Unfortunately, apart from small-scale mining, which has been preserved for Ghanaians, compulsory acquisition of 10% ownership by Ghana Government in large-scale mining and a limiting quota for foreign employees, there has never been any law to ensure LCP in the mining industry”.
He added that the large-scale mining companies in the country were mostly foreign multinational companies that had continued to operate without statutory obligation to recruit and train Ghanaians, use Ghanaian companies for the supply of goods and services, and transfer technology to Ghanaians and thus “the only probable direct benefits obtainable from the mining industry were some employment and taxes”.
He was however optimistic that employment and training of Ghanaians could be higher, if there was an LCP law to enforce this, considering that large-scale mining companies, all together, employed about 27 000 people made up of professionals like engineers, scientists, accountants and administrators as well as artisans like carpenters, electricians, plumbers, machine operators and drivers, and some unskilled labour.
“Also truly, since 2001, the annual foreign exchange earnings from the mining industry have ranged between 33% and 56% of the gross annual foreign exchange earnings of the country, and the mining industry also contributes 10% of the annual internal revenue of the country. But Ghana could have benefitted more from the mining industry if there was LCP law,” he said.
Lauding the efforts to put in place LCP legislation for the oil and gas industry, Prof. Mireku-Gyimah called for it to be legalized as soon as possible, saying “Perhaps, this is also the right time to extend the LCP law to the mining industry”.
With reference to the mining industry, Prof. Mireku-Gyimah called for the proper implementation of the existing laws through enforcement to realize government’s objectives for sustainable development.
Citing legal instruments, including The Minerals and Mining Act, 2006 (Act 703), Environmental Protection Agency Act 1994 (Act 490), Water Resources Commission Act, 1996 (Act 552) he cited environmental problems, resulting from mining activities, that had in recent times become a matter of public concern and called for provision to be made to prevent such problems in the oil and gas sector.
The activities of galamsey operators and their contribution to the problem of environmental degradation through indiscriminate mining activities, sometimes supported by chiefs, encouraged by politicians and assisted by foreigners was also cited.
“The point here is that when the LCP law finally comes into effect, it must be enforced otherwise the objective of maximizing the benefits from the oil and gas industry for national development cannot be achieved,” he concluded.
Presentations were also made by Prof. Ivan Addae-Mensah, Chairman of the Petroleum Commission and a former Vice Chancellor of the University of Ghana, Legon, Prof. Yinka Omorogbe, an internationally recognized energy consultant, Dr. Torfinn Harding, a Research Fellow at the Oxford Centre for the Analysis of Resource Rich Economies, at the Department of Economies and New College, University of Oxford, Mr. Steve Akuffo, an Architect and Development Consultant and Dr. Kwesi Aning, Dean and Director of Academic Affairs and Research at the Kofi Annan International Peacekeeping Training Centre (KAIPTC).
The three-day conference was attended by representatives of civil society organizations, organized labour, communities close to areas of oil exploitation, development experts, as well as stakeholders in the oil and gas industry.
The opening ceremony on the first day, which was chaired by the Paramount Chief of the New Juaben Traditional Area, Daasebere Oti Boateng, had Vice President John Mahama delivering the keynote address, with the Chairman of the NDPC, Mr. P. V. Obeng delivering the welcome address.
The conference was sponsored by Tullow Ghana Limited (TGL), Ghana National Petroleum Corporation (GNPC), Bulk Oil Storage and Transportation (BOST), National Petroleum Authority (NPA), Vitol Upstream, Cirrus Oil and Sahara. thebusinessanalystgh@gmail.com Credit: The Business Analyst
A print version of this story was first published in The Business Analyst of Wednesday, December 14 – Tuesday, 20, December 2011.