Deloitte report tells govt to introduce “specialised insurance policies” to boost risk appetite of financial institutions in petroleum sector

In order for the financial institutions to be supported to improve their risk appetite in the oil and gas industry, about 40% of respondents captured in the survey expressed the view that “specialised insurance policies” can help improve the risk appetite of  the financial institutions in the oil and gas industry, a survey conducted by Deloitte on local content for Ghana’s Petroleum Commission, has said.

Financial institutions in Ghana consider the upstream oil and gas industry as high risk, the survey said.

“These respondents also rank Hybrid financing as the most effective and available financing tool in the industry,” the report said.

 

The report further indicated that political interference is cited as the major roadblock for exploration.

The survey identified a number of challenges facing Ghana’s petroleum industry.

For instance, it said that tax-related challenges are prevalent in the petroleum industry in Ghana.

“The most significant issue, as reported by 46% of respondents, is ‘high tax rates’. Others also cited ambiguity in tax compliance and frequent changes in tax,” it said.

Respondents suggested tax amnesty to companies in the sector with 42% of them advocating for its implementation to create a more conducive tax environment for businesses.

“The Petroleum Commission received an average rating of 3.80 for responsiveness, indicating a generally positive perception. However, the most common challenge with dealing with the commission was High fees or charges, cited by 14 respondents,” it added.

33% of respondents suggested that the commission improves service delivery by providing online-based processes. 80% of respondents indicated that they are familiar or very familiar with the requirements governing local content and participation of Ghanaians in the industry.

91% respondents believe local content regulations  are sufficient or somewhat sufficient to promote and protect Ghanaian participation in the industry, however about 25% of respondents believe the regime discourages foreign investment.

The survey further recommended some steps to be taken by the Petroleum Commission to improve its efficiency, enhance stakeholder satisfaction, and contribute to a more sustainable and competitive petroleum industry in Ghana by implementing these strategies.

These include implementation of a Structured Digital System.

“The commission should invest in a streamlined online platform with clear guidelines and timelines for license applications can significantly reduce processing time,” it said.

The other suggestion is  to increase stakeholder participation.

“The commission can foster open dialogue and collaboration with industry stakeholders through regular meetings, workshops, and feedback mechanisms,” it explained.

“Justify Processing Fees. The commission should conduct a thorough review of the processing fees to ensure they are reasonable and commensurate with the services provided.

“Train and Equip Businesses. The commission should develop training programs and initiatives to promote the adoption of energy-efficient technologies.”

 

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