Local Content in oil producing Africa

Infant oil and gas industries must adopt policies for local business participation; Expert

By Silvia Nyambura

Countries such as Ghana, Uganda and Tanzania that have young oil and gas industries should put up the right frameworks to ensure local business participation. According to Neema Lulangira, the former Acting Director for Local Content in Investments in the Prime Minister's Office Government of Tanzania, only a handful of nationals are engaged in core and service value chains in the industry. In addition, most of the goods and services demanded by the sector are imported.

Speaking to Journalists at the ongoing Covering Extractives Training at the White Sands Hotel in Daresalaam, Lulangira said, "Following significant discoveries of oil and gas, governments need to come up with policies and legal frameworks to guide operations in the industries of the respective countries."

She explained key focus areas of such frameworks should be on capacity building, participation of local businesses, procurement and usage of locally produced goods and services as well as fabrication and manufacturing of machinery products locally.

Local businesses however continue to face several challenges that hinder participation in local content.

"Because of the infant nature of the industry, there tends to be lack of enough knowledge by indigenous players. Additionally, complex processes in business registration, tax policies, poor infrastructure, lack of access to markets and finance also continue to plague these industries," Lulangira added.

Tanzania recently discovered 50 trillion cubic feet of Liquefied Natural Gas (LNG) in Mtwara, South East of the country. The government made a decision to explore the LNG offshore as this arrangement is more affordable and better promotes local content than onshore exploration. Tanzania defines a local business as one owned 51% by a Tanzanian national.

The local content debate in Uganda continues as players feel government is not supportive of their need to participate in the oil and gas industry. Ghana on the other hand introduced a law streamlining the same on the same about 3 years ago. The West African country began commercial oil production in 2010 from its Jubilee field that was producing 110,000 barrels of oil per day by 2015.