Implement strong Local Content Policy to avoid rape by big companies – President of TT’s largest Industrial Estate

Sep 24, 2017 News

---

By Kiana Wilburg

With a robust Local Content Policy in hand, Guyana would be in a better position to reduce the opportunities for big companies to “rape” the country of its resources while giving nothing much in return.
This was essentially the sober advice provided by Mr. Ashley Taylor, President of Point Lisas Industrial Port Development Corporation Ltd. (PLIPDECO). Point Lisas is a major industrial centre in Trinidad and Tobago and is host to the Point Lisas Industrial Estate and the Port of Point Lisas, both of which are managed by PLIPDECO.
Taylor has been the President of the Corporation for eight years. During that time, the corporation has seen a lot of improvements and diversification.
Taylor, during an interview with Kaieteur News in Trinidad and Tobago (TT), at the company’s headquarters, said that Guyana in developing its strategic plan going forward would be wise to stress on the “percentage of local content” to be had from companies in the sector.
He stressed, “(Local Content) is going to prevent companies from just coming into Guyana and for want of a better word, ‘raping’ the resources of the country and leaving and it will ensure that at least a certain amount of the resources and revenue is utilized in Guyana to give citizens the skills, wherewithal and knowledge to develop comparable or similar type of operations for the benefit of that country.”
The President of PLIPDECO also acknowledged that with Guyana’s significant oil find, many companies will be expressing an interest to get a piece of the pie. In this regard, Taylor advised that it would be prudent for Guyana’s authorities to be cautious and conduct rigorous due diligence on all companies regardless of their names, acclaimed reputation or how much money they have to invest.
AREAS OF CONCERN
A quick overview of Guyana’s draft Local Content Policy reveals that there are a number of measures absent; particularly those which would safeguard against procurement fraud, nepotism, favouritism and conflict of interest.
This Policy is intended to make certain that Guyanese benefit from the sector. This can be done through ensuring the use of local supplies by USA oil giant, ExxonMobil as well as making sure that the company trains and employs Guyanese. The draft policy is currently in circulation where a number of submissions have been made thus far. This is according to Natural Resources Minister, Raphael Trotman.
Be that as it may, Transparency International cautions that several nations have been made to suffer the consequences due to grievous oversights in the Local Content Policies.
The anti-corruption watchdog has pointed out that politicians and decision-makers are usually very close to the economic elite, and in several cases are the main beneficiaries of local content requirements. As such, local content rules end up benefiting and generating revenues for government-affiliated individuals, failing to achieve some of their objectives such as promoting enterprise development and the broader sustainable development of the country.
Transparency International said that there are several examples of conflict of interest and favouritism in the design and implementation of local content policies.
The international body pointed out that this has been the case in Nigeria, where local content may easily be used by the political and economic elite to extract rents, as well as in Uganda, where close ties between senior public officials and the private sector may distort the policy-making process and the award of licences and other local content benefits. In fact, Transparency International said that studies have shown that local policies and resources are often directed to groups based on their affiliation, ethnicity and loyalty to the president.
It went on to state that similarly, Angola’s local content policy has been considered highly vulnerable to exploitation by public officials and their close allies in the private sector. The global watchdog said that investigations conducted by Angolan organizations and the US government have raised questions regarding contracts awarded to companies belonging to Angolan decision-makers.
According to the investigations, in compliance with the local content law that requires international companies to partner with local companies to be able to operate in Angola, an American company entered into a consortium with two Angolan companies to participate in oil blocks. However, it turned out that the real owners of one of these local companies were the former chairman and CEO of Sonangol, the Angolan state-owned oil company (responsible for the agreement with the American company), and a minister of state.
Considering the fact that instances of favouritism and conflict of interest have been seen at the level of government for over 20 years, local anticorruption advocates are calling on the APNU+AFC administration to not be remiss in ensuring that the Local Content Policy guards against the aforementioned.
According to Guyana’s draft, the Local Content Policy framework seeks to address, the suite of opportunities that may arise and the approaches to be taken in selecting and developing opportunities related to enhancing the capabilities of Guyanese nationals and businesses.
The Policy essentially articulates that this will be done through; training, development and employment initiatives (Capacity Development), ensuring availability of ownership participation for qualified Guyanese equity interest (Ownership Value), supplier development provisions for goods and services by locals to support sector operations (Local Content); and well-tailored social contributions for greater impact and benefits (Societal Benefits).
It also describes what will be done to ensure that the activities in the petroleum sector are conducted in a manner that transparently secures the maximum benefit for the people of Guyana, while recognizing the limitations of the country and holding all actors accountable to the present and future generations of Guyanese who are the owners of the nation’s petroleum resources.
Additionally, the draft policy recognizes that the petroleum resources of Guyana belong to all its citizens, and represent an asset of significant intrinsic value, which once removed diminishes the wealth of the nation, unless there is transformation in value from resources below the ground to improved quality of life above it for current and future generations of Guyanese.

---

---