The Ministry of the Presidency yesterday released its long-awaited local content policy which mandates the submission of an annual plan by oil and gas operators which among other things would describe programmes of support and development for Guyanese suppliers.
Coming weeks after the lifting of first oil and without a legislative framework underpinning it, the Guyana Government has faced strong criticism for the sloth in activating and enforcing the policy. A large number of foreign companies – particularly from Trinidad and Tobago – have established themselves in the oil and gas sector without having to be compliant with a local content policy.
Dated January 2020, the policy defines local content as the “active participation and development of Guyanese labour and suppliers in the petroleum sector and the benefits that arise from expenditure in the sector on labour, goods and services for Guyanese industry, the economy and wider society”.
Oil and gas operators have to submit a yearly plan to the Minister within 60 days prior to the beginning of the year. The policy says that this plan must address “forward-looking” local content objectives and related activities covering the operator’s petroleum-related work sub-divided between different petroleum projects to “enable identification of the project-specific utilization of Guyanese persons, suppliers and sub-contractors, the training of Guyanese persons, the capacity building of Guyanese suppliers…”
Operators also have to submit a report after the end of each half year “providing evidence of progress in achieving the objectives, activities, programs and estimated utilization of Local Content” in the operator’s plan.
In relation to the Guyanese supplier development programmes, the local content policy says the operator “shall describe in its Plan programs of support and development to Guyanese suppliers for the forthcoming year and for 2 to 5 years out that involve the operator and its primary contractors”.
In the selection and design of such programmes the operator shall give consideration to supporting Guyanese suppliers to access and navigate procurement processes of the operator and primary contractor;
-skills competencies development for Guyanese workers;
-quality standards and certification of Guyanese suppliers;
-access to finance to develop capacity;
-support to bolster the capabilities, capacity and competitiveness of Guyanese suppliers;
-information to Guyanese suppliers on how they might partner with foreign supplier to increase local opportunities.
The introduction to the document noted that the policy framework precedes an overall petroleum sector policy for local content. It added that the policy sets the stage for a forthcoming legal framework. The absence of such despite the discovery of oil offshore Guyana in 2015 has seen much criticism directed at the government for not acting with expedition. Critics note that operators could ignore the policy framework but a law is a different matter.
“As a backstop to assure policy delivery, the government is considering codification of the policy through regulation, underpinned by the necessary legal framework, consistent with international trade obligations…”
In the interim, the document said that “it is the expectation of the government that all relevant parties implement the policy speedily, comprehensively and in good faith, facilitating the smooth transition of all parties to formal regulation in due course.
Underscoring the concept of `First Consideration’, the policy says that “In making decisions concerning recruitment and procurement to execute petroleum activities, operators and their contractors shall give first consideration to Guyanese persons having appropriate qualifications and experience, and to Guyanese suppliers where capable and competitive”.
In exercising the principle of first consideration, the policy said that operators and their primary contractors shall “look first to the Guyanese labour market to fill positions and explore “creative solutions” to provide on-the-job training.
Operators shall also identify categories of goods and services required for petroleum operations for which there is evidence that Guyanese having the required capability be engaged in the procurement process either directly, as a sub-contractors or in partnership with more experienced firms.
The policy also calls for operators to “demonstrate innovation to apply the policy of first consideration to help develop the Guyanese supplier market”.
In terms of policy implementation, the document says that the Minister shall establish a Guyana Local Content Oversight Committee which will review progress and make recommendations to the minister.
On an annual basis, the minister shall prepare and submit a report to Cabinet and Parliament on the implementation of the policy including agreed strategies for corrective measures by operators where objectives have not been attained.
