Bharrat says gov’t hoping to table local content law before year end

Following a call by the Georgetown Chamber of Commerce and Industry (GCCI) for the tabling of local content legislation by the end of this year as its members say they are being sidelined from  oil and gas works, Minister of Natural Resources Vickram Bharrat yesterday assured that government is assiduously working towards that timeline.

“We are hoping to table it before the end of the year. It is a work-in-pro-gress,” Bharrat told Stabroek News when contacted.

He said that works are ongoing to prepare a draft and government hopes that it would be completed so that the legislation could be tabled before the end of 2021.

President of the GCCI Timothy Tucker told this newspaper yesterday that local content legislation is long overdue, as six years since the discovery of oil here local companies are yet to see tangible benefits and are being overlooked by foreign companies.

“We issued that statement because of the series of complaints from GCCI members of being overlooked when they know they have the capabilities, and we believe that now is the time for the legislation to be tabled so we could move forward,” Tucker said.

“We are six years into oil and gas and there are companies that have built businesses and their capacity and they are being overlooked,” he added.

The statement referred to was one issued yesterday by the GCCI bemoaning the awards to foreign companies of infrastructural works that local companies are capable of doing.

In addition, the private sector organisation said that it also notes that a large number of oil and gas support services businesses are operated here by foreign-owned companies and that its members have complained of being bypassed.

“The Georgetown Chamber of Commerce and Industry (GCCI) notes the overwhelming number of infrastructure work which is being handled by foreign-owned companies. Additionally, the GCCI notes the high volume of trucking, logistical and other support services which are being operated by foreign-owned companies, particularly as it relates to the oil and gas sector,” the GCCI statement said.

“The GCCI has been in receipt of several complaints from its membership of cases in which they are being bypassed for work in favour of the aforementioned category of companies. This occurs in spite of the indigenous Guyanese enterprise being both commercially competitive and having the technical capability,” it added.

It is against this background that the GCCI called on government to ensure that local content legislation is passed by the end of this year, even as it emphasised that the body was not against foreign investments.

“The Chamber reiterates that it remains supportive of foreign investment in Guyana. We encourage, however, that this not be done at the expense and displacement of indigenous Guyanese companies. The Chamber has been encouraged by the posture of the government as it relates to local content and calls on the government to table Local Content legislation in Parliament before the end of the year,” the statement added.

GCCI’s President noted that the country’s Corporations Act will also need to be looked at and amended so that foreign companies cannot use the loophole to come here and register and then be termed a local business.

“Here you have Guyana-registered but foreign owned companies. The Corporations Act allows it to happen and the GCCI has been asking that it be updated… The local content will deal with oil and gas but if we amend that Act, we address so much more,” he said.

GCCI is urging that at least the local content legislation draft be made public. “We have not seen a draft. We do not know where we currently are [with regards to the legislation]. If we can see at least the draft and can have a look at it, that would help,” Tucker added.

Scrapped

Having scrapped an earlier document created under the former APNU+AFC government for lack of initiatives for local participation in the sector, President Irfaan Ali and his Cabinet, in August of last year, tasked a new Local Content Panel with “undertaking a review of policy initiatives on local content in the petroleum sector and to provide guidance for the development of Guyana’s Local Content Policy and Legislation.”

Chaired by Shyam Nokta, the panel comprised former Minister of Foreign Affairs, Carl Greenidge; trade unionist Carvil Duncan; Trinidadian Energy & Strategy Advisor Anthony Paul; former Trinidadian Minister of Energy Kevin Ramnarine; chartered accountant Floyd Haynes; and the Ministry’s Legal Officer Sasha Rajkumar-Budhan. The team completed the report last November.

They determined after analyses from stakeholders that the definition of local content “should be clear and take into account the realities of Guyana including the available local expertise in Guyana’s diaspora.”

Most of the high tier petroleum engineering and other technical jobs are taken by non-nationals as this country lacks the skillsets needed for this task. And while oil was discovered over six years ago, it is unclear when many of the technical jobs and specialist procurement opportunities will be taken up by locals.

The panel said that local content should be modeled after the Nigerian, Trinidadian and Ghanaian definitions. Nigeria’s definition states it is “the quantum of composite value added to or created in the economy by a systematic development of capacity and capabilities through the deliberate utilization of local human and material resources and services…”

Then in February of this year, President Ali heard from a large stakeholders meeting on local content.

Chaired by Vice President Bharrat Jagdeo who also has oversight for the oil and gas sector, Ali had underscored that local content here must be looked at holistically and not just from an oil and gas perspective.

The President had stressed that the policy will evolve as Guyana develops. The Local Content Policy, he maintained will be a living, flexible and responsive document.

“If you are under the mistaken belief that local content is about oil and gas alone, then we’ll be commencing the development of this document from the wrong perspective. Whilst the Oil and Gas Sector would be one that will be critically targeted in a local content strategy, the local content strategy is an overarching strategy that will cover every single sector of our development as a country,” he stated.

Jagdeo had stressed that a new model Production Sharing Agreement (PSA) is essential to the inculcation of local content in oil and gas.

“We cannot develop a sector where the bulk of benefit redound to the investor…Guyanese must share in this prosperity…the current PSA is stacked in favour of the oil and gas companies,” the Vice President stated, adding that there will however not be unrealistic expectations but “fairness and equity”.

But since that stakeholders’ meeting not much has been said of other meetings to discuss the draft or when the public can expect to see the draft.