General Trends Likely to Impact 2023 and Beyond
We believe the following trends will shape the legal and commercial outlook for the energy, extractives and infrastructure sectors in 2023:
Micro and Macro-economic Factors
The general downward trajectory of the Ghanaian economy and global economic pressures could disrupt significant investments in the energy, extractives and infrastructure sectors in 2023.
The global energy sector's gradual shift from fossil-based systems of energy production to renewable energy sources is also likely to have an impact on the focus sectors. Although the shift aims to mitigate the adverse impact of climate change, it poses a challenge for African countries like Ghana with untapped fossil fuel resources that will aid in developing their economies.
Outlook and Projections (Commercial)
Our outlook and projections for the energy, extractives and infrastructure sectors from a commercial perspective are as follows:
More Opportunities for the Renewable Energy Sector
Ghana will continue to increase the share of renewable energy in its energy mix and explore hydrogen energy and other clean energy sources.
New Horizon for Upstream Oil and Gas Industry
GNPC is likely to commence drilling activities in the Voltaian basin, Ghana’s onshore sedimentary basin, between the fourth quarter of 2023 and the first quarter of 2024.
As Ghana’s upstream oil and gas industry has so far been entirely located offshore, onshore exploration activities will create a new horizon for the industry.
Promotion of Five Offshore Blocks for Direct Negotiation
The Ministry of Energy is likely to continue to actively seek investors to invest in Ghana’s unexplored blocks which are the Offshore Cape Three Points South, Shallow Water Cape Three Points, South West Saltpond, Deep Water Cape Three Points Block, and the Expanded Shallow Water Tano Block.
It is hoped that, amidst the global energy transition and its associated phenomenon of sustainable investing, investors will not be dissuaded from investing in the five offshore blocks and direct negotiations will commence.
Commencement of Iron Ore Mining
Following the determination of the total iron deposits in Ghana, the Ghana Integrated Iron and Steel Development Corporation (GIISDEC) has confirmed that Ghana is likely to start iron ore mining by end of the year 2023. GIISDEC is expected to develop a masterplan for the iron and steel industry.
Operationalisation of Petroleum Hub Development Corporation (PHDC)
The PHDC was established by the Petroleum Hub Development Corporation Act, 2020 (Act 1053) with the primary object of promoting and developing a petroleum and petrochemicals hub in Ghana. The PHDC is currently recruiting staff and is likely to commence operations in 2023. The PHDC is expected to spearhead the development of the integrated petroleum complex in the Western Region of Ghana with the aim of adding value to the upstream and downstream petroleum value chain in Ghana and beyond.
Outlook and Projections (Legal/Regulatory and Policy)
Our outlook and projections for the energy, extractives and infrastructure sectors from a legal/regulatory and policy perspective are as follows:
Reform in the Income Tax Regime
There are expected to be some reforms in Ghana’s income tax regime including an introduction of a 35% additional income tax bracket for PAYE.
Programmes and Measures in the Infrastructure Sector
Government is likely to commence works on the 2023 National Flood Control Programme across all 16 regions in Ghana. The Water for All programme is also expected to be implemented and the construction of a number of water supply projects will likely continue.
A re-introduction of road tolls on selected public roads and highways is also expected.
Legislative Reforms in the Construction Industry
After repeated pressure from stakeholders, the Construction Industry Development Authority Bill (CIDA Bill) is likely to be passed into law. The CIDA Bill when passed is expected to bring sanity and professionalism into the construction industry.
It is also hoped that the Condominium Bill and the Ghana Housing Authority Bill will be approved by Cabinet. The Condominium Bill, when passed into law, will regulate shared ownership of common areas which has arisen due to increasing demand for development of high rise and compact properties and the need to maximise limited land space. On the other hand, the Ghana Housing Authority Bill when enacted will establish the Ghana Housing Authority to serve as a regulator in the housing sector and lead the supply side of the housing market.