Citizens from across the country will today have an opportunity to tell government their views and expectations of a Local Content Policy (LCP) for the petroleum sector, as President Irfaan Ali is scheduled to lead a stakeholder consultation on the draft which is expected to be transformed into law.
With over 140 stakeholders already consulted before the document was crafted, according to government, select representatives from across the country will from 1pm today begin discussions on what they believe should be in the document.
“The Goal of this Local Content Policy (LCP) is to maximize the level, quality, and benefits of participation in the petroleum sector value chain by Guyanese,” the document, uploaded on the Ministry of Natural Resources Website states. (https://nre.gov.gy/wp-content/uploads/2021/02/LCP-for-the-Development-of-Guyanas-Petroleum-Economy-Revised-Draft-02.11.2021-updated.pdf)
“This will require improving the capacity of Guyanese and their businesses, institutions, and governance, in a manner that allows the country to enhance existing sectors of the economy and add new and emerging ones so as to support national sustainable development. It is the government’s intention to use these as a springboard for Guyana’s transformation into a sustainable and low carbon economy,” it adds.
In the crafting of the policy, a report from the panel stated that the approach to developing a policy must be done through meaningful dialogue and must include vulnerable populations like women, coastal communities that depend on the sea/rivers for livelihood, youth and indigenous persons.
“Indigenous peoples must be consulted using the principle of Free, Prior and informed Consent (FPIC),” that report states. It added that “A phased/sliding scale approach should be used considering the evolving nature of the sector. Policy needs to be strategic and dynamic/living; should have specified life span (5 years) with reviews. Policy should benefit from international experience and local experience in other sectors and be broad-based to include sectors other than oil and gas. Policy must be clearly articulated and communicated to the population. It must be easy to implement and have provisions for measurement and enforcement,” that report said. https://nre.gov.gy/2021/02/10/local-content-report-advisory-panel-on-local-content/
Having scrapped an earlier document created under the former APNU+AFC government for lack of initiatives for local participation in the sector, President 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.”
‘Realities’
Chaired by Shyam Nokta, the panel comprised former Minister of Foreign Affairs, Carl Greenidge; trade unionist, Carville Duncan; Trinidadian Energy & Strategy Advisor, Anthony Paul; former T&T 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 five 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…” it said.
The panel said that there be a Local Content Framework developed and it should include a Local Content Policy Statement; A Local Content Strategy and an implementation plan with identified timelines; and Local Content Legislation/Regulations.
“This Strategy and Implementation Plan should be developed to identify actions and timelines to deliver the Policy objectives. It is recommended that the Strategy cover a 5-year period and address details on critical issues such as (the) distinction between a locally registered company and a Guyanese company,” the document states. As an example, it said that specific criteria should be established to determine whether a company qualifies as a Guyanese company and emphasized that such a workforce must show that at least 50-70 percent are locals.
“It is recommended that the criteria include the following, the company must be over 51% beneficially owned by Guyanese, the company’s head office must be located in Guyana and a certain percentage (50-70) of workforce must be Guyanese,” it said.
“The Strategy should identify both the demand side and supply side and how it impacts on local content and local capacity building. It should also establish key performance indicators. Consideration should be given to measures such as mandatory procurement targets where appropriate and aspirational targets otherwise, and where specific sectors and categories can be reserved for Guyanese,” it added.
Dedicated portal
Highlighted was that consideration should be given to measures such as publishing tenders in mainstream media across the country, enhancing the supplier portal and providing for first consideration to be given to Guyanese.
It is unclear if this should be a dedicated portal for oil and gas procurement and local content activities.
It said that a strategy should also identify clear actions and timelines on issues such as supply chain development and management; training and capacity development; technology transfer; guidance for local content plans including review and approval process, reporting and reporting disclosure, and verification, targets with consideration for these to be assigned to projects; ring fencing of certain categories of skills and labour, incentives and penalties; and information sharing and public disclosure. Consideration should be given to requesting companies to include and elaborate local content in their field development plans and all major projects (such as pipelines, facilities, plants, infrastructure etc).
And after a conducting a preliminary review of existing legislation and regulations governing the oil and gas sector, the document stated that provisions which speak to local content, both directly and indirectly have been identified.
Since the Petroleum Commission is likely to be the overarching regulatory institution for the sector, and with the Petroleum Commission Bill still at the level of Parliament, the draft said that consideration “should be given to making amendments as necessary to accommodate local content, and for Regulations under this Act to be considered in addressing local content. Penal-ties for non-compliance with local content provisions, and/or targets approved in Local Content Plans, should be clearly established within the Regulations.”
“In addition, Regulations should indicate categories of skills, services and goods which are subject to ring fencing provisions, with a sliding compensation scale as well as defined periods for set targets,” it added. And example cited for set targets stated that 30% of a particular category of offshore workers must be Guyanese by 2022 along with employment targets for specific job categories such as management, technical, and other personnel.
“Within the legislation there can be established a base of employment for certain job categories. In addition, there will be a need to reconcile existing legislation to bring it in line with the local content framework (policy and strategy considerations) once determined. Principal among these would be the Companies Act to make the distinction between locally registered and Guyanese company.”
Springboard
And when the draft Local Content Policy was completed, it said that the ultimate goal of this country having the document would be to “provide a springboard for Guyana’s national sustainable development and transformation into a sustainable and low carbon economy, well prepared for the fourth industrial revolution and net-zero emission.”
To achieve this, Guyana, the LCP says, intends to “use the oil and gas sector for the development of its citizens, regardless of race, ethnicity, religion, or sex. The aim is to create a world class supply chain, workforce, and business environment for the Petroleum Sector to facilitate and attract investment beyond oil and gas, in innovation, technology development and environmental preservation. These will provide the portal through which Guyana makes its transition into a leadership position as a net-zero carbon emitter, in keeping with its commitments to mankind, made before oil and gas were discovered.”
As such key objectives were listed and it is expected that participants at today’s forum will again brainstorm and assess if other objectives should be added or those proposed tweaked.
“1. Enhance the skills and competencies of Guyanese Citizens and ensure they are internationally competitive. 2. Promote maximum use of Guyanese in the petroleum sector workforce. 3. Maximize the use of locally sourced goods and services in the Petroleum sector. 4. Domesticate key capabilities and activities that international investors traditionally retained at Head Office,” the LCP stated.
“5. Enhance and make world-class the training, technology, innovation, and research and development base of Guyana. 6. Promote alliances between Guyanese and world-class firms for the transfer of technology and knowledge transfer and research and development in the industrial sectors. 7. Promote and facilitate access to finance, local investment in businesses and industries, capital aggregation and enhance the depth and quality of the Guyana’s capital markets 8. Provide equitable access to all Guyanese, giving preference to communities traditionally under-served or disadvantaged for social, economic, or historical reasons or by virtue of disability,” it added.
And although it listed in detail recommendations that would ensure local participation in the petroleum sector at all levels, the document made clear that key to ensuring this was enforcement and oversight.
Noted too was that the document should be evaluated every two years to ensure its adequacy and effectiveness, given the ever changing global dynamics.
Under ‘Monitoring, evaluation and reporting’, the report said that Local Content plans by companies will be submitted for approval for: “The entire project life cycle, Annual operations”. Those plans from the oil and gas companies must include “Procurement Plan, with strategies at the various stages of the project planning cycle. Standards and certifications required for provision of goods and services, Qualification requirements for employment and skills development plan, with forecasts of specifications of skills needed, local workforce gaps anticipated, and training needed”.
It should also have, “Succession planning for positions not held by Guyanese, Supplier Development Plan Research and Development plan and estimate of the value of local content…” among a long list of other requirements.
Set targets
The sector minister also has responsibilities according to the draft to “Set priority areas of focus b. Set minimum levels of local content c. Set targets for capacity development and local content d. Empower the Regulator e. Keep Regulations current f. Champion Local Content g. Facilitate collaboration across government agencies h. Set fees and penalties associated with this Policy.”
Not clear are if a panel will help him in setting those fees and penalties or how empowering of the regulator will be executed.
The Regulators’ roles are also listed along with those for the Oversight/Inter Agency Working Group. They are that the regulators “Oversee implementation of Policy. Research and analyse market, recommend updates to policy, regulations, and schedules to Minister c. Maintain databases and collaboration platforms for stakeholders d. Set standards for certification and competencies e. Maintain a Register of qualified suppliers f. Review and recommend approval of/approve Local Content plans g. Report to the Parliament and people of Guyana.”
