GHANA OIL & GAS SUMMIT CHALLENGES OF THE LOCAL CONTENT LAW: By: Mr. M. C. Vasnani (C. E. O) Thursday April 23, 2015
INTRODUCTION Consolidated Shipping Agencies Limited (Conship) is a 100% Ghanaian Logistics, Freight and Shipping company. It was established in February 1996 with a service oriented in Freight Forwarding & Logistics. Over the years, Conship has successfully built its presence in the Freight Forwarding and Logistics market at national and international levels through key relationships with its clients and partner agents. Conship has offices in Accra, Tema and Takoradi with a staff strength of 168.
SERVICES Freight Forwarding & Customs Brokerage Sea and air Consolidation Inland Haulage & Deliveries Warehousing Dangerous Goods Handling Ship Agency & Husbandry Services Oil And Gas Services Projects related Services Packaging
OUR TRACK RECORD Within the last decade, Conship has become one of the leading Freight Forwarding and Logistics Companies in Ghana. TULLOW GHANA LIMITED Domestic Logistics and Forwarding Services, 2010 to current. Jubilee & T.E.N. Offshore Project WEATHERFORD GHANA Domestic Logistics and Forwarding Services, 2010 to current Jubilee & T.E.N. Offshore Project MODEC GHANA LIMITED Domestic Logistics and International Forwarding Services, 2010 to current. EUROPEAN HYDROCARBON LIMITED/AFRICAN PETROLEUM Logistics Base and Transportation, Vessel Operations, Offshore Liberia Oil Exploration. 2010 to 2013 (three Wells) TALISMAN ENERGY B.V. Logistics, Husbandry and vessel Agency, Offshore Sierra Leone. 2012 TECHNIP S.A/GHANA. Full Logistics Operations on Jubilee Phase 1A project, both Onshore and Offshore Support. 2012 & 2013 T.E.N. Project 2015, Just to mention a few.
LOCAL CONTENT LAW The law, which was passed by the Ghanaian Parliament in November 2013 but took effect Feb. 1, 2014, is expected to : i. Ensure that oil discoveries benefit Ghanaians ii. Allow foreign companies operating in the country to get fair returns on their investments by Joint ventures and partnerships Purpose of the Local Content Law a) To create jobs through the use of local expertise b) To make use of local goods and services c) To ensure the involvement of Local business and local financing d) To Develop the local capacity through education, skills and technology transfer e) To increase the capability and international competitiveness of domestic businesses f) To create Petroleum and related supportive industries g) To provide a robust and transparent monitoring and reporting systems; ensuring the delivery of local content policy objectives
BENEFITS Conship, in an effort to ensure that its operations met and exceeded the requirements of the Oil and Gas industry improved its policies, systems and processes especially in the areas of : Human Resource Development We employed the right people for the right job and ensured that they were adequately trained. In Conship, we believe that our greatest assets are our people. Our staff strength has grown by 200% within the last 5 years Health Safety, Security and Environment (HSSE) - Creating a well resourced HSSE department to meet international standards Compliance Understanding the Anti- Bribery Act Obtaining FCPA certification through Trace
BENEFITS Information Technology - Installing tracking systems on our delivery vehicles to monitor drivers performance and ensure safe delivery of cargo as part of the international standards. Conship also acquired a cloud based logistics software to improve its reporting modules and give clients real time tracking of their shipments as well access to their documents The success and improvements made by Conship with the assistance of our partners and clients clearly demonstrates that Ghana has the capacity to provide logistics services to the Oil and Gas service companies under the local content law
CHALLENGES 1. Competition with Multinationals 2. Local Insurers fronts for foreign underwriters because of limited local capacity 3. The introduction of no pay - no policy system in the insurance system in Ghana 4. High Cost of interest on loans and financing by local banks (current interest rates between 28% - 30% on the GHC and 10% - 13% on the USD) 5. Implementation and support of Local Content Law by government 6. Current devaluation of the local currency (GHC) 7. High operational cost (including energy and taxes)
WAY FORWARD As efforts are being made to encourage local players to grow their capacity, operators are seen to be demonstrating adequate commitment and are to be encouraged to harness the great opportunities in the Ghanaian Local Content Policy. In this regard, local operators must shun foreign support where the capacity is available in country, such as Freight and Logistics. The need to have the local banks support Project Banking and not only commercial banking where the interest rates are very high. Local insurance companies to be encouraged to form a consortium to be able to meet the insurance needs instead of going out to reinsure and pass the high premiums to local companies. The need for proper Due Diligence conducted including physical checks on businesses and their declared executives.
WAY FORWARD Enforcing Compliance and training under the Anti-Corruption Acts (globally) Furthermore, there should be strategic effort to build human capital for emerging opportunities in the business because that is the only way the industry can be independent and rely less on foreign capacity. Enforcing the applicable sanctions against offenders in various areas under the Local Content law. Introduction of tax breaks and deferments for local companies to enable them support the industry. To increase training in the area of human capacity as well as operations.
Thank you for your attention
QUESTIONS & ANSWERS