Oil companies need to be vetted on employment of Guyanese - use of local goods and services must also be on the cards, says Christopher Ram

Oil companies need to be vetted on employment of Guyanese – use of local goods and services must also be on the cards, says Christopher Ram

May 08, 2017 News

There are just a few operators in Guyana’s emerging oil industry. But are we keeping a close enough watch on these companies?
Do we know if they are fulfilling their obligations of their contracts?
Are they hiring Guyanese?
Are they using local goods and services?
These are just some of the burning questions some concerned citizens are asking. They opine that it is commendable that the administration is taking steps to protect the sector and the billions expected to flow in revenue, through the establishment of a Sovereign Wealth Fund and fast tracking Guyana’s application to be a member of an international watchdog organization of the natural resources sector.
But in the meantime, local financial minds believe that there are a few simple things which could be done to hold oil operators accountable.
Chartered Accountant, Christopher Ram suggested in his recent writings that the Government, in particular the Ministry of Natural Resources, can ensure the review of all applications and licences to determine the extent to which operators are complying with the local content prescription in respect to employment of Guyanese citizens and the procurement of goods and services locally. Ram said that oil companies are required to incorporate local content in their operations. He emphasized that it is the duty of the Government to enforce the requirement from day one.

Chartered Accountant, Chris Ram

Natural Resources Minister, Raphael Trotman

The Chartered Accountant explained that the Petroleum (Exploration and Production) Regulations 1986 contains a requirement that the application for a petroleum prospecting licence and for a petroleum production licence must contain a statement giving particulars of the applicant’s proposals.
The proposals must speak to the employment and training of citizens of Guyana, while in the case of the production licence, there is the additional requirement that the application shall include a report of the goods and services required for the production and processing operations which can be obtained within Guyana and the applicant’s intention in relation thereto. In the case of the prospecting licence, Ram said that the Minister may attach such conditions as he determines.
In the case of the production licence, the law is clear: it prohibits the Minister from granting a petroleum production licence, unless the applicant’s proposals for the employment and training of citizens of Guyana, and for the procurement of goods and services obtainable within Guyana, are satisfactory. “In other words, the licence must include satisfactory proposals regarding the employment and training of citizens of Guyana and the purchase of goods and services locally.”
Additionally, Ram said that local content requirement is a feature of every oil-producing country and Guyana’s neighbours such as Trinidad and Tobago are very good at it.
“Everyone in Guyana is excited about the attractive concept of the Sovereign Wealth Fund which deals with the future. But the case for dealing with the present must by definition be stronger, since it deals with immediate imperatives. The word is that Minister of Natural Resources, Raphael Trotman is working feverishly on such legislation. In that regard, we are already late, perhaps understandably so.’
Be that as it may, Ram insists that any delay in the introduction of formal legislation cannot constitute a waiver of the local content obligations of prospecting and production licences.

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