The Georgetown Chamber of Commerce and Industry (GCCI) has released a detailed response to the third draft of Guyana’s Local Content Policy (LCP) for the oil and gas sector in which they argue that a Local Content Dialogue Commission (LCDC) should be established as the formal mechanism for oversight of the policy.
According to the GCCI, while the state has the function to advance the welfare of the Guyanese people there are other extremely important stakeholders in the petroleum sector and national development process therefore the commission should include “government, operators, civil society, academia and private sector.”
The 10-page document released by the chamber is said to capture its position on the policy following a survey of the opinion of its membership, a comparative analysis of best practices and a critical analysis through the framework provided by the Newfoundland and Labrador Oil and Gas Industries Association (NOIA).
The chamber has identified 11 dimensions of the policy which though necessary given the framework of local content in Guyana have weak points or are altogether missing.
These dimension include strengthened competitiveness since the LCP is intended to ensure that Guyana maximizes the benefits of its national patrimony for the locals. As such GCCI proposes that the LCP exist alongside a Competitiveness Plan for the government to advance the competitiveness of the domestic private sector.
The LCDC which is to have oversight of the policy is also expected to facilitate transparency and examine the local content plans of each operator and prime contractors to ascertain its merit.
Public mechanisms for the dissemination of a company’s local content plans should be established in a manner where it can come under scrutiny, the GCCI stressed.
Mapped
They further argue that the LCP must be mapped into the national development strategy and must be clearly linked with the establishment and functioning of the Petroleum Com-mission.
Additionally, according to the Chamber, an estimated timeline for the introduction of the local content legislation should be made clear.
Criticism has been levelled against the “Automatic Approval” to be granted to prospective businesses if the Minister fails to respond to an application in a timely manner.
“Essentially the section allows the Minister a timeframe to review applications but if not completed, automatic approval is guaranteed. This equates to a company being given an automatic approval until and unless some serious objection is raised by the Ministers. This fundamentally distorts the power which the sovereign has. There needs to be a comprehensive review of this language in this section as no approval should be automatically granted,” GCCI contended.
The policy moreover does not speak to any penalties for companies which fail to report or follow the commitment to Local Content, it was noted.
The Chamber reminded that “Good faith and handshaking cannot suffice” so “there ought to be some mention of what the penalty in general sense will look like should there be violation.”
Specifically, a request was made for a relevant fine and a general policy on dealing with foreign companies which will front Guyanese partners simply to obtain local content treatment, in situations where the company is not materially Guyanese.
“The Local Content Policy is the document which needs to set out a general guiding principle as to how these situations will be dealt with,” GCCI states.
The chamber argues that these partnerships should facilitate local content development as part of a national development strategy or competitiveness plan.
Partnering system
Specifically the policy should ensure that operators or contractors from abroad have a partnering system to enable local companies and investors to learn about the industry and its supply needs. It should facilitate awareness sessions to keep Guyanese up to date on development and publish varying statistics.
“There should be a discussion on the tiers of suppliers’ development plan and by category. There should be a clear plan of action by Government to directly or indirectly support the development of the capacity of local businesses, as well as providing suitable infrastructure to ensure that companies can participate in the oil industry in a competitive manner. There should be an emphasis placed on ensuring the relevant standards and certifications are made readily accessible to Guyanese businesses. A plan of action in this regard should be clearly delineated,” the chamber stressed.
Other suggestions encompass the inclusion of a “domestic-only tenure list” which would identify those commodities for which Guyana’s local industry holds a comparative advantage.
“Those industries should be ring-fenced for provision by Guyanese companies [even as] there should be escape clauses…to ensure that no entity is perpetually bounded by the Guyanese company,” they advise.
The final suggestions on the policy emanating from the chamber relate to the development of the capacity of individuals.
The policy, they argue, should ensure that there is a bridge with the national development strategy to address certifications, skill transferal and training.
It has been suggested that the University of Guyana or an Institute in the University conduct certification courses which link to international bodies which perform certification of workers for oil industry.
Noting that there are skills in the industry which can only be acquired via ‘learning by doing’ the chamber has called for a deliberate and explicit plan for skill transferal and development of the indigenous capacity needs to be articulated in the local content policy. These could include suitable apprenticeship or understudy-type programmes.
Finally the chamber has called for a deliberate effort by government to engage in Labour Market Information Analysis (LMIA) so as to align the educational institutions with the forecast demand for skills.
