Former chief executive of the Ghana National Petroleum Commission (GNPC), Tsatsu Tsikata, has asked banks and other financial institutions -- particularly insurance firms -- to partner domestic entrepreneurs in building strong local momentum to push the nascent hydrocarbons sector.

Speaking at an insurance forum organised by Star Assurance in Accra, he said this is the only way Ghanaians can benefit from the millions of dollars in investments that are being pushed into the sector.

He said in his remarks: “We need to ensure the opportunities for local actors in dominant economic areas of the oil and gas industry to drive economic growth.

“And to achieve this we need competent financial institutions, including insurers, to team up with local investors to forge that strong local capacity.”

Mr. Tsikata described as “unfortunate” the current situation wherein the insurance sector and other financial institutions are not at the helm of affairs in the buoyant activities taking place on the country’s offshore front, but rather prefer to push their deposits into Treasury bills.

He said: “Despite the current economic barriers due to the price slump in crude oil and other traditional exports on the global market, the financial sector -- which includes the insurance sub-sector -- continues to post good results.

“But what is the economic impact of gains from the financial sector if all mobilised deposits are pushed into Treasury bills instead of injecting them into critical sectors of the economy?

“Without financial institutions stimulating growth for the economy’s productive areas, success of these sectors will not be sustainable.”

The comments of Mr. Tsikata, who once headed the GNPC, come amidst public criticism of banks’ growing preference for government’s securities instead of lending to the private sector.

The capacity of local insurance companies to assume risks in the upstream oil sector has also been questioned.

Currently, about 95 percent of the country’s oil and gas business is insured overseas as local insurers lack the requisite technical expertise and capitalisation limits to underwrite big ticket contracts.

The lapses have reduced the competitiveness of local insurers in the oil and gas sector, and created a situation for capital flight.

And the former GNPC boss indicated that the time for an aggressive local participation in the country’s oil and gas sector is now, as foreign investors remain sceptical about their investments -- with some cutting down on costs due to the continual slide in crude oil prices on the global market.

“We must begin now, in the low of the oil cycle, to activate the resources in our own capacity within the current tough period to fast-track economic growth.

“That is the only way the financial sector and local actors can be better-positioned in the upturn of the sector to tap the huge prospects of the industry, especially in the area of gas generation which has received less attention from sector investors,” he advised.

Mr. Tsikata encouraged local actors -- including financial actors -- in the oil and gas sector to insist on enforcement of legal provisions that encourage increased local content participation in the hydrocarbons sector.

“Foreign investors are ready to respect the country’s laws, but it will be up to local industry players to demand their due as provided by the laws guiding the business. It is about taking the bull by the horns and not waiting entirely on government interventions,” he said.

The one-day forum was organised as part of activities to mark the 30th anniversary celebration of Star Assurance Company, a leading life insurer, and pooled together stakeholders in the insurance fraternity to discuss opportunities available to insurers in the country’s oil and gas sector.

It exposed industry chieftains and actors to opportunities that are available for insurers, and the need for capacity building to participate actively in the oil and gas business.

Managing Director of Star Assurance Company, Kofi Duffour, said of the forum: “This is a thought-leadership programme to discuss pertinent issues affecting the insurance industry as a way of helping to grow both the sector and economy at large