The year 2015 marked a watershed in the economic development of Guyana. From the time of the first oil discovery and thereafter with successive impressive finds, the country’s economic fortunes have been reported as being on an upward trajectory. As is often the case in times of such windfall economic prosperity, vested national interests come to the fore and protectionist and insular antennae are lofted. The temptation is perhaps most attractive during such periods, to ring-fence the coveted sector and guard it exclusively for domestic players. In Guyana shades of this were manifested and the convergence of such interests between the policy-makers and the private sector has resulted in the enactment of the Local Content Act, 2021, Act No. 18 0f 2021 (“the Act”).
It should be noted that both the Long Title of the Act and section 3 on its Application, restrict the legislation to ‘operations and activities in the petroleum sector for Guyana’. Further, given that the provisions of the Interpretation section of the Act only refer to the production of ‘petroleum operations’, it would seem then that operations and activities in the gas sector are excluded from this local content regime.
As regards the Act, it has not altogether been plain sailing and as expected, contending points of view have been aired. Commencing with the Parliamentary debate on the Bill, led on the one side by the Hon. Attorney General and the Hon. Ministers of Finance and Natural Resources, they were responded to by Hon. David Patterson from the Opposition benches. A public exchange took place between Government back-bencher Hon. M.P. Sanjeev Datadin ably supported by Mr. Timothy Tucker of the Georgetown Chamber of Commerce and Industry, and political veteran Mr. Carl Greenidge. Latterly, the restrictive positions have now been manifested at the policy level, with the Local Content Secretariat declining a request from RAMPS, a well-established logistics company, for a Local Content Certificate, without which it can no longer continue to service the Oil Sector.
From accounts in the press, it would seem that RAMPS, in the estimation of the Local Content Secretariat, ran afoul of the Act in three aspects: i) as regards the nationality of the company; ii) the composition of its directorate; and iii) notification of the increase in its share capital. While the first is a question of law, the latter two can be contended on the facts.
Regarding the nationality aspect, the inability of RAMPS to acquire a Local Content Certificate – notwithstanding the fact that its 51% owner recently crystallised his Guyanese nationality which had been acquired through parentage – has not been well received in all quarters, especially at a time when H.E. President Ali has been in London, Dubai and at various regional fora, urging foreign investors that “Guyana is open for Business”. No less a person that his National Security Adviser, Capt. Gerry Gouveia, a soldier, aviator and businessman, has entered the fray on the side of RAMPS being a Guyanese company.
While it is true what Capt. Gouveia states, as a general proposition, that a Guyanese is a Guyanese is a Guyanese, it is not altogether accurate. With the law, as indeed with life, there are certain caveats and provisos and “buts” that one must apply.
Hence Article 149 of the Guyana Constitution, which prohibits discrimination, begins with the prophetic words, “Subject to the provisions of this article”. Thereafter, paragraph (1) states the general proposition against discrimination, as put forward by Capt. Gouveia. But a Constitution as well as Legislation must be read as a whole; thus Article 149 (5) and (6)(b) introduce circumstances to which the right to non-discrimination on the ground of nationality is subject. In other words, it is not an absolute right. Two examples readily come to mind: for tax purposes, and to continue to qualify as a remigrant, a Guyanese must have lived within the tax jurisdiction for a total period of 183 days in a year. These laws are therefore discriminatory in so far as it is not all Guyanese who can claim Guyana as their tax jurisdiction, or return to Guyana and benefit from the status of a remigrant.
However when one reads the Act, in Article 6, on Guyanese nationals and Guyanese companies applying for a local content certificate, there is no such residence requirement akin to that for taxation and remigrant status. Thusly, without a similar stipulation as per residence, a Guyanese is a Guyanese is a Guyanese for the purpose of local content.
So, if the intendment of the policy makers was to apply a qualification on who or what qualifies as a Guyanese national, or a Guyanese company, it would have required an effortless addition on the part of the draftsman to include in Article 2 of the Act after ‘Guyanese nationals’ [sic.] the words ‘…who has resided for a total period of 183 days in the 12 months immediately preceding the date of the application for a local content certificate…’. In this regard, contrary to the suggestion of M.P David Patterson, there is no need to amend the time-tested definition of a Guyanese citizen, but merely to qualify it with a residency requirement for the purpose of the Act.
In all this, the preliminary question to be posed is, what is the policy framework that forms the basis upon which the Local Content Secretariat can impose the requirement of a Local Content Certificate on economic players in the Oil sector?
The framework resides in the Government’s Local Content Policy, which was translated into the legal obligations as set out in the domestic legislation. Yet, such obligations have to be construed alongside prior commitments made through Treaty Law. For example, Article 7 of the Revised Treaty of Chaguaramas (“The Treaty”) prohibits discrimination on grounds of nationality; does anyone recall the local private sector objecting when Barbadian/American Sir Kyffin Simpson came and set up his mega-farm in the Rupununi, on the grounds that he was Barbadian? Is there any objection to Suriname-based insurance company Assuria extending its footprint here by putting down a spanking new office in Georgetown, to compete alongside long-standing local insurance providers?
The discrimination in the Act in favour of Guyanese nationals and companies, as a preserve of local content, coming in legislation passed just months ago, runs counter to the obligation in Article 27 of the Vienna Convention on the Law of Treaties, which states that a party (Guyana) ‘may not invoke the provisions of its internal law as justification for its failure to perform a treaty’.
Having said that, it is often the case that in a nascent stage of economic development of a new and emerging sector like petroleum, countries seek to ensure that such gains result in economic development of the country and its people. If this laudable goal was the rationale of policy makers, they may have put the cart before the horse, by going ahead and passing a law which puts the country at odds with its CARICOM partners and its obligations coincident with the CSME.
In any club or group, one must play by the rules. This administration is big on respect for the rule of law and the virtues of a rules-based system, whether it is within the context of CARICOM or the WTO. The Treaty provides ample guidance of how to address the potential pain of abiding by rules and from situations where the exercise of rights creates serious difficulties in a sector of the economy. As it did in making special provisions for LDCs, so too had the Treaty carved out a Special Regime and extended it to HIPCs, of which Guyana was the sole candidate at the time of its drafting at the turn of the century.
It is a bitter irony that a HIPC country which two decades ago had sought a provision for special treatment (Article 156 should be deleted from the Treaty), is now the fastest growing economy in the Hemisphere. Yet, it is that same new-found oil wealth in an emerging sector that is less than a decade old, which drives the thinking behind a special dispensation for the economic actors operating here.
Guyana must therefore make a case within the Organs of CARICOM, albeit belatedly, for the oil sector to be ring-fenced for Guyanese nationals and companies. That case must be evidence-based and supported by sound economic analysis. It must be time-bound and subject to review, monitoring and adjustment. A similar approach has been made by other Member States in the past, at the time when the relevant decisions were being taken by the Community. The difference here of course, would be in the timing of the demarche by Guyana to the COTED and the Conference of Heads of Government.
The CSME is a work in progress. In a common market comprised of economies at varying levels of development, there are bound to be speed bumps and hiccups along the way. The EEC was confronted with similar differential issues as regards Portugal and Ireland. In these situations, dialog, consultation and information-sharing very often can carry the day. In the current environment this approach would avoid rancor, ill-will and blood being spilt on the floor. There is therefore much to commend in the path being taken by the Conference of Heads of Government, which has sought to go forward with a two-speed process, led by a coalition of the willing.
In addition, a pre-existing actor in the local oil sector like RAMPS, which already was contributing to GDP, paying taxes and importantly, employing hundreds of Guyanese in decent paying jobs, should be allowed to continue as a Guyanese company, in the absence of any residency requirement in the Act. This would in fact enhance the amount of value which accrues to Guyana. Indeed this is one of the stated goals of the local private sector, which would like to ensure that the benefits from the sector not just go to the Guyanese owners, but to Guyanese as well. In the alternative, is RAMPS to dispose of its fixed assets, mothball its office and put its employees, Guyanese included, on the bread line, in this hard guava season?
As it is, RAMPS has already hinted at recourse to the courts. While as a private entity they would have to seek special leave of the CCJ, and without prejudice to their right so to do, I urge two options, again turning inward to the Treaty: i) requesting a Member State to seek an Advisory Opinion from the CCJ on the Act (Article 212); and ii) utilizing the Good Offices role of the Secretary General (Article 191), although this option, in the strict sense, is to be used by ‘parties to a dispute’. The latter has been successfully used in the past, for example in relation to the importation of flour, the game of cricket, and to resolve issues relating to candidatures for international posts.
