Protocol on upstream petroleum industry insurance placement to actualise the local content and local participation regulations, was launched in Accra on Friday.
The 10 guidelines document was developed by the Petroleum Commission and National Insurance Commission in collaboration with the local insurance and reinsurance companies and insurance brokers.
It is to enforce the petroleum local content and local participation regulations, 2013 L.I.2204 and the sections 37, 38, 53 and 54 of the Insurance Act, 2006 Act 724, as well as open windows of opportunity for the insurance and reinsurance companies and brokers to actively participate in the oil and gas business in Ghana.
Mr Emmanuel Armah-Kofi Buah, Minister of energy and Petroleum, said the development and launch of the protocol did not only mark a key milestone in achieving the policy objectives of local but also signifies a new era of institutional collaboration among agents of the State.
He said it is now up to Ghanaian companies to take advantage of the Legislative Instrument to grow both the sector and their businesses.
The Minister said he is aware that the petroleum Commission is in the process of developing similar protocols or guidelines for financial and legal services in the upstream sector and entreat it to speed up the process so as to eliminate uncertainties and anxieties with respect to those services.
“I will also like to encourage Ministries, Departments and Agencies, institutions and organisations whose input would be needed for the said protocols to offer the Commission the necessary support to do that work.
“This and other strategies which the Commission intends to roll out in due course are aimed at enhancing in-country value retention. Indeed, there are opportunities for insurance and other services in the entire petroleum value chain. These opportunities will not be gained on a silver platter – we must work harder,” he added.
Mr Buah implored them to make feverish efforts towards institutional engagement for the promotion of local content and explore opportunities collectively to improve and simplify the implementation of local content.
He said the time is right to accelerate development and adaption of common standards and principles to facilitate the participation of Ghanaian service providers in the petroleum industry and there is the need to promote greater and more efficient utilisation of Ghanaian goods and services in all spheres of petroleum operations.
“Take the bold step to address all challenges along the oil and gas value chain,” he said and commended the Petroleum Commission and National Insurance Commission and collaborative stakeholders for their efforts.
He pledged government’s continuous commitment towards providing environment for businesses to thrive and urged local service providers to take their chances.
He noted that local content is not a default outcome and stressed the need for all to make a conscious effort to make it work.
Ms Mona Quartey, a Deputy Minister of Finance, emphasised that the direction of every policy on the petroleum sub-sector is intended to guide the development and management of the emerging oil and gas sector as a catalyst for economic development.
She said oil and gas industry in Ghana is an emerging area and there is the no doubt that participation of the insurance industry would increase client protection and also go a long way to increase insurance penetration, which currently is below two per cent.
“The concerted effort made to increase and retain oil and gas insurance placement in the country is commendable, bearing in mind that Ghana has world class oil fields, with an upside potential of three billion barrels and over two trillion standards cubic feet of gas.
Ms Quartey therefore reminded insurance practitioners about the adoption of effective risk management practices and must get themselves prepared to implement the guidelines, which come with additional responsibilities.
She said as Ghana is only a part of the legion of oil producing countries on the globe, it is also important to draw on lessons that could readily be learnt from other countries to avoid notable pitfalls.
Ms Lydia Lariba Bawa, Commissioner, National Insurance Commission, said regrettably the huge investment in the oil and gas industry have yielded very little in respect of the proportion of accrued profits retained by local industry participants to develop the nation’s industrial or commercial base.
This, she said is a clear indication of capital flight as the profits from the contracts are repatriated abroad, where most of the international service firms are located.
“To overcome this challenge of poor participation by local service providers, all members of the Ghana Insurer Association underwriting non-life insurance business have formed an insurance pool dubbed Ghana oil and Gas Insurance Pool to pool resources to underwrite oil and gas risks,” she said.
Ms Bawa said with the formation of the insurance pool, all insurances would be placed locally and the excess would be reinsured on the international insurance market.
Mr Theophilus Ahwwireng, Acting Chief Executive Officer of Petroleum Commission, expressed the need for all to provide their quota to make the local content guideline a reality.
He noted that local content is a very good way of getting insurance as well as doing good business and urged all service providers to take advantage of it. GNA