Local Content Implementation Enhancement through Infrastructure Development in Ghana’s Oil and Gas Industry

Abstract

Since the discovery of oil and gas (O&G) in commercial quantities in 2007, Ghana has made some progress in passing several policies such as Local Content and Participation Framework, ostensibly to stem the effects of resource curse – connotes countries with more natural resources turned to be undeveloped than countries without natural resources. Put it differently, the country’s local content is meant to stimulate industry development by indigenizing the needs of the petroleum industry. However, the above aim is constrained by the country’s infrastructure deficit of about US$ 2.5 billion annually needed to provide the enabling environment for the growth of indigenous companies. The study, therefore, is to propose policy options for enhancing local content implementation through infrastructure development. To that end, the policy implementation in Angola, Brazil and Norway is reviewed, and the research participants are purposively sampled and interviewed. Consequently, the study found that the regulatory institutions and legal framework should be strengthened to attract private investment in infrastructure development. In addition, a special provision should be inserted in future petroleum contracts to support the Infrastructure Fund; through infrastructure-for-oil trade; and encouraging voluntary contribution from oil companies in exchange for reduced taxes into the Infrastructure Fund. The findings contribute to the existing literature in local content development by moving the discussion from training, local employment and goods and services targets to developing host country’s local infrastructure for sustainable development of indigenous and foreign businesses.