Over the past few years, Ghana has been rolling out local content and local participation regulations in various sectors of the economy. In 2013, comprehensive local content and local participation regulations in the upstream oil and gas sector were introduced, as well as in the electricity supply industry in 2017.
The Energy Commission (Local Content and Local Participation) (Electricity Supply Industry) Regulations, 2017 (L.I. 2354) (the “Local Content Regulations”) aim to:
Local equity requirements
Local participation involves setting minimum thresholds for Ghanaian shareholding in enterprises operating in the power sector in Ghana. The following are highlights of local equity/participation requirements in the power industry:
|Power sector activity||Initial local equity||Target local equity|
|Wholesale power supply||15%||51% in 10 years|
|Electricity supply activities related to renewable energy||15%||51% in 10 years|
|Electricity distribution||30%||51% in 10 years|
|Electricity Sales Service||80%||100% in 5 years|
|Brokerage services||80%||100% in 5 years|
|Investment in electricity transmission infrastructure||15%||49% in 10 years|
Local content requirements
Local content involves setting minimum thresholds for the utilisation of Ghanaian goods and services in the electricity supply chain. The following are highlights of local content requirements in the electricity supply industry:
The Local Content Regulations provide details on thresholds for the employment of Ghanaian citizens and for the use of raw materials produced in Ghana.
A service provider in the electricity supply industry is required to facilitate technology transfer to Ghanaian citizens through, for example, the formation of joint venture or partnership arrangements for licensing agreements between a Ghanaian service provider or supply company and a counterpart foreign service provider or supply company. A service provider is required to provide annual reports within 60 days after the end of the year on the implementation of the technology transfer sub-plan contained in the Local Content Plan.
A service provider in the electricity industry must insure any insurable risk through an indigenous Ghanaian insurance brokerage firm or where applicable, a reinsurance brokerage firm. A service provider who requires legal services in connection with activities in the electricity supply industry must retain the services of a Ghanaian legal practitioner or a firm of Ghanaian legal practitioners whose registered place of business is located in Ghana.
The Local Content Regulations also impose detailed requirements on service providers in the electricity supply industry in relation to the procurement of financial and banking services. Service providers are required to retain only the services of Ghanaian financial institutions. A service provider in the electricity supply industry must maintain a bank account with an indigenous Ghanaian bank and transact business of a minimum of 10% of its total financial transactions through the bank account held with the indigenous Ghanaian bank.
The Local Content Regulations also require service providers in the electricity supply industry to award contracts to indigenous Ghanaian engineering and technical consultancy companies to provide engineering and technical consultancy and maintenance services. Where it is established that there is no local capacity or expertise, service providers may engage the services of offshore engineering and consultancy firms.
It is expected that the Local Content Regulations will propel the growth of the electricity supply industry in Ghana, create more employment opportunities for Ghanaian citizens, add value to locally produced goods, enhance technology transfer to Ghanaian citizens and benefit the local economy as a whole.
Electricity supply industry includes any activity in the power sector (a) that requires a licence under the Energy Commission Act, 1997 (Act 541) or the Renewable Energy Act, 2011 (Act 832) and (b) related to the manufacture of electrical equipment, electrical appliances or renewable energy equipment in respect of projects for the development and utilization of renewable energy resources.