…Local content policy vows aggressive push to build capacity in oil sector …stresses fair, adequate access to employment for locals WHILE there has been recent criticism against the final draft of Guyana’s Local Content Policy Framework as lacking “key provisions that put Guyanese first”, the document, as seen by this newspaper, contains strong language and intentions to follow through with “investment in our people”
The policy framework is meant to outline the guidelines by which local content will be understood, developed, measured, secured and implemented in Guyana’s petroleum. It takes into consideration the urgent need for the optimisation of the revenues received from oil to benefit the Guyanese economy and citizens present and future.
The document states: “This policy recognises that the petroleum resources of Guyana belong to all its people and represent an asset of significant intrinsic value, which, once removed, diminishes the wealth of the nation, unless there is transformation in value from resources below the ground to improved quality of life above it, for current and future generations of Guyanese persons.”
According to the policy framework, it also recognises the need to project Guyana as a “viable destination for inward investment” and a worthwhile competitor. It provides details on implementation which includes the contents and timing of annual local content plans; templates to estimate and report local employment and contracting opportunities; minimum tender procedures to give full and adequate opportunity to local suppliers; the roles of government, operators and contractors and the expectations for local capacity building and supplier feedback. It was drafted from constructive consultations with stakeholders in both public and private sectors including education institutions; civil society and oil and service companies.
FOR THE PEOPLE The policy framework vows to “aggressively pursue strategies” for Guyanese to participate and build capacity in the petroleum sector for “maximum possible benefit now and in the future”.
“To maximise the benefits of the petroleum sector for local employment and local businesses, investors, operators and their primary contractors shall participate in a manner that gives Guyanese persons and Guyanese suppliers fair and adequate opportunity and first consideration where capable and competitive to provide labour, goods and services and improve and enhance their capabilities, and in so doing become internationally competitive and progressively provide a greater share of future labour and services to the sector,” the policy document states.
It intends to see this through ensuring that there is effective government oversight; stakeholders are held accountable and instruments and administrative institutions are in place.
Given the size of discoveries declared thus far, it acknowledged that further field discoveries are likely; a series of multiple capital projects over a sustained period is projected and this increase in investor interest will likely increase the demand for local labour, goods and services.
In keeping with the expectations, policy indicated stated: “We are nevertheless mindful that the sector requires a significant input of highly-specialised skills and services as well as materials, products and equipment, many of which are unlikely to be competitively-sourced or manufactured in Guyana until these capabilities have been developed. The petroleum sector also requires high standards of quality, efficiency, reliability, ethics, care and attention to the environment, communities and property and the well-being of its labour force. By supporting and participating in the sector, those who develop and provide labour, goods, infrastructure, equipment, facilities, networks, systems and other services will need to demonstrate these high standards in order to be competitive and win work.” It notes that presence of international service providers and manufacturers provide the opportunity for Guyanese suppliers and government to learn as Guyanese persons and suppliers grow to be competitive by accessing international supply chains within the sector. Guyanese persons and Guyanese suppliers will also be afforded “fair and adequate access to employment and supplier opportunities” on the principle of being competitive against industry standards.
LEARNING FROM MISTAKES While criticism has also come against the policy as it refrained to mandate joint-ventures between foreign and local businesses, the document also provides an explanation for such. It explains: “Various partnering models may overcome the challenges of local suppliers winning work directly, including consortia, sub-contracting, licensing and joint ventures. Mindful of the experience of other countries where mandated joint ventures have encouraged the creation of fronting companies or acted as a disincentive to inward investment, it is the policy of the Government of Guyana to not mandate local-foreign joint ventures as a requirement for market access in the upstream petroleum sector, but instead to encourage such alliances as one among a range of partnering options, and ensure these are market-competitive ventures and effective in supporting competitive local supplier participation and development,” the document states. The framework sets out to learn from both the successes and mistakes of other countries. The policy has been designed to be “fit-for-purpose” which means that there will be continuous review to keep up-to-date the Government’s position in all aspects of managing the country’s petroleum resources for national development.
ACCOUNTABILITY Meanwhile, operators will be held accountable for ensuring that their Local Content Plans are updated annually; informed by recent performance and current market information. Operators will be held accountable to deliver their Local Content Plans â”at a minimum —half-year and end-year being able to utilize these reports to improve their local content performance
The Local Content Plans are to be handed over to the Minister, as the document states: “Within 60 days prior to the beginning of each year, or part thereof as applicable for the first year, the operator shall submit to the Minster a yearly Local Content Plan. Within 21 days from receipt of the operator’s Local Content Plan the Minister shall issue an invitation and shall meet with the operator to discuss the effectiveness of the Local Content Plan and agree to the information in the Local Content Plan and to any modifications to ensure the Plan’s consistency with this policy and with the Operator’s contractual obligations under the applicable Petroleum Agreement/s.”
They will also be judged on capacity development initiatives such as support for local education and training institutions, local research and development and investments in productive assets in Guyana that support the Government’s local content policy. After the completion of this the final draft of the Local Content Policy, Director of the Department of Energy, Dr. Mark Bynoe stated that the document would be presented to the Private Sector and other stakeholders for their scrutiny.
LINK ORIGINAL: Guyana Chronicle