Amidst global energy transition: Govt must protect investments in petroleum sector — CBOD
The Chief Executive Officer of the Chamber of Bulk Oil Distributors (CBOD), Dr Patrick Kwaku Ofori, has said amidst the global energy transition, government must prioritise investments to help protect the petroleum sector while transitioning into clean energy.
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That, he said would help lay down the right foundation for a resilient and sustainable energy future for Ghana as the world transitions towards cleaner energy sources.
Energy transition
Energy transition is the global shift from fossil fuel-based energy systems to low-carbon and renewable energy sources.
It involves a fundamental transformation in the way energy is produced, distributed, and consumed. The primary drivers of energy transition are the need to mitigate climate change, reduce greenhouse gas emissions, improve energy security, and promote sustainable development.
As the world shifts towards clean energy sources, demand for traditional fossil fuels like petroleum may decrease, leading to lower revenues and profitability for petroleum companies.
Investments in oil and gas infrastructure may also become stranded as demand wanes, potentially leading to write-downs and financial losses for investors.
Increasing regulations aimed at reducing carbon emissions and promoting clean energy may impose additional costs and compliance burdens on petroleum companies, impacting their bottom line.
Therefore, navigating these risks will require strategic planning, diversification, and innovation within the petroleum industry to adapt to the changing energy landscape.
Tax incentives
Dr Ofori explained that it was important for government to provide tax incentives for private sector participation in renewable energy ventures, as well as create a conducive business environment that would attract and retain investments in the petroleum sector.
Such measures, he added would ensure a stable revenue stream and protect investments against unforeseen policy shifts.
Dr Ofori was addressing concerns about maintaining investment in the petroleum sector amid the shift towards renewable energy at a press soirée at the instance of CBOD last Wednesday in Accra.
“If the government wants private sector to participate and invest in the renewables, there has to be tax incentives and also some elements of protection for investment.
While these are sorted out, I think people will be more than willing to diversify their investments into renewables to be able to keep that,” he said.
Dr Ofori further indicated that without measures that safeguard the interests of local entrepreneurs and investors, investors may hesitate to commit to projects, fearing sudden policy changes that could negatively impact their investment.
He mentioned industries such as mining and oil as crucial sectors where investors rely on stable fiscal policies to predict their returns and plan their investments accordingly.
Therefore, he said providing reliable regulatory frameworks and investment protection would encourage investors to diversify into renewable energy to contribute to its growth and sustainability.
Collaboration
Furthermore, the CEO called for collaboration between the government, industry stakeholders, and policy think tanks to develop strategies that balance economic growth with environmental sustainability.
He emphasised the need to view investments in renewable energy through a lens of economic pragmatism, considering both local and global market dynamics.