New Law Alert: Emissions Levy Act, 2023 (Act1112)
GRA to implement new tax law amendments
SSNIT announces 2024 Pension Indexation Rate
National Petroleum Authority
Becoming a Commercial Downstream Player in the Petroleum Industry
We have taken our readers on an insightful journey and this week marks the closing chapter of our oil and gas series.
Our previous posts were centered on the legal requirements to become a commercial upstream player in the petroleum industry. If you missed it, you can check it out here:
1. Series 1- Becoming Commercial Upstream Player in the Petroleum Industry; and
2. Series 2- Becoming a Commercial Upstream Player in the Petroleum Industry.
The players in the downstream sector are known as petroleum service providers (“PSP”) and this week, we aim to inform our readers on the requirements to become a PSP in Ghana.
The commercial activities of the downstream industry include the importation, exportation, distribution, storage, processing, marketing and sale of crude oil, gasoline, diesel, liquefied petroleum gas, kerosene and other designated petroleum products.
The National Petroleum Authority (the “Authority”), governed by the National Petroleum Authority Act, 2005 (Act 691), issues permits and licenses to registered businesses or Ghanaian citizens, to operate as PSPs. There are two main steps involved in setting up to become a PSP in Ghana – firstly, the prospective PSP must be incorporated or registered at the Companies Registry and secondly, register with the relevant regulatory institutions depending on the commercial activity being undertaken.
1. INCORPORATION AT THE COMPANIES REGISTRY
The first step is to incorporate a company limited by shares under the Companies Act, 2019 (Act 992) or register a partnership under the Incorporated Private Partnerships Act, 1962 (Act 152) at the Companies Registry.
A wholly foreign owned company or foreign individual is required to partner with an indigenous company or Ghanaian citizen to form a joint venture company (“JVC”) in order to undertake commercial activities in the downstream industry. According to the Public Notices of the Authority, the local partner must hold at least fifty percent (50%) or fifty-one percent (51%) shares depending on the category of registration.
A duly incorporated company or partnership is then issued with a Certificate of Incorporation and a document that lists all the details of the registered business known as the Company Profile or Partnership Details respectively.
2. REGISTRATION WITH THE REGULATORY BODIES
Once incorporated at the Companies Registry, the company must register with and obtain authorizations from the relevant institutions including Environmental Protection Agency, Ghana Highway Authority, Ghana National Fire Service, Ghana Water Company Limited, Driver Vehicle & Licensing Authority and National Petroleum Authority.
2.1. Authorizations from relevant institutions
Before registration with the Authority the prospective PSP will be required to provide permits from the Environmental Protection Agency, Ghana Ports and Harbors Authority and Town and Country Planning Department; reports from the Ghana National Fire Service and Geological Survey Department; and consent letters from the Ghana Maritime Authority, Ghana Navy, Ghana Water Company, Customs Excise and Preventive Services and Department of Oceanography and Fisheries (where applicable). The Authority will also need evidence of registration with the Ghana Revenue Authority and Social Security and National Insurance Trust before permits and licenses are issued.
2.2. The National Petroleum Authority
The Inspection, Monitoring and Licensing (“IML”) department, is one of the departments under the technical division of the Authority, responsible for issuing licenses to the various categories of PSPs. The categories of PSPs include refinery companies, bulk distribution companies, bulk oil storage depots, transport operators, bulk road vehicles, oil marketing companies, liquefied petroleum gas marketing companies, retail outlets and bunkering companies.
Companies must apply for permits and licenses under the desired categories of services they intend to operate, and the Authority through IML, will issue licenses and permits such as an Oil Trading License, Construction Permit, Petroleum Products (Export) License, Petroleum Product Marketing License or any other permit or license required to operate.
It is important to note that although the petroleum services have been categorized, they are not mutually exclusive as there may be instances where a person would have to acquire for example an oil marketing company license before being issued with a petroleum product bunkering license or a license to establish a floating storage unity (FSU).
Generally, the licenses and permits are valid for one year, renewable yearly. All construction permits, on the other hand are valid for twenty-four (24) months and will expire if the works have not commenced within that period starting from the date when the permit was granted.
We will be happy to assist you with the incorporation and registration processes should you require that service.
By Ewoenam Yawa Sybil Genevieve Atiase