Don’t wait for Local Content Legislation

Dec 14, 2017 News

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…Finance Minister urges businesses to “get out there and scout for partnerships”

 

By: Kiana Wilburg

Instead of sitting around crying and quarreling over the absence of Local Content Legislation, Finance Minister, Winston Jordan says that businesses must get out in the field and scout for partnerships.

During the budget 2018 debates, he told the National Assembly that Guyana could have the best legislation in the world, one without faults. However  this does not guarantee a place at the table for all of Guyana’s locals, he said.

“At the end of the day, if you don’t get it right, no amount of legislation will help you. If the people want oranges of a certain size and you are growing oranges of all different sizes, then the people would not buy from you, no matter how ‘local content’ it is.”

The Finance Minister added, “If they want skilled technicians on their rig they won’t pick anyone from here…if we want to be part of this cake that is out there then we have to stop talking and start doing…”

The economist also referred to statements made recently by Chairman of the Georgetown Chamber of Commerce and Industry (GCCI), Deodat Indar. Jordan recalled that it was Indar who said that there has been an influx of foreign companies registering their businesses in Guyana.

Indar also said that while this is taking place, he noticed that there is no partnership taking place with local companies.

Finance Minister Jordan said, “No one is coming to you if you can’t give them something. I have said before; do not wait on Local Content Legislation. Go out there and scout for people you can form partnerships with…”

“We don’t have the technology, the finances or the human capacity. How are we going to compete side by side with these people who have all these years of knowledge and experience and everything? We have to creep before we walk. Creep by forming partnerships with the people who know; learn the business, get a toe into the business, gain some finances before you get out there on your own. Stop all this talking whole day of legislation.”

The Finance Minister said that while some are busy talking, the foreign firms are busy getting registered.

INFLUX

The Georgetown Chamber of Commerce and Industry (GCCI) has received several reports from its legal partners regarding an influx of registration by foreign businesses for the oil and gas sector.

President of GCCI, Deodat Indar, said that while the Chamber is encouraged by this, it is particularly worried by the absence of partnership with locals. It insists that in order for Guyana’s capacity to grow, there must be joint ventures between foreign companies and locals.

He said that this is one of the vital ways in which businesses here can ensure that they are part of the supply chain of the oil and gas sector.

Indar said, “The foreign companies are not saying ‘you are good at catering and I am good at it, so let’s work on being associates and bid for contracts’. They are setting up and doing their own thing. So the ‘budding up system’ comes into play here.”

The GCCI President added, “We are saying that if you come into this environment, partner with a local so that we can have skills transfer. A host of services are needed here and if we don’t start this process then we would have a sector that we won’t be able to make much of an input in the next three years.”

Indar said that this was one of the ways in which Canada was able to build an almost self-sufficient oil and gas sector.

He said, “On our trip to Canada, we learnt that the country was able to build capacity as its companies ‘buddied up’ with others to supply operators there. That is what needs to happen here.

“It will take time for locals to build capacity and services so if you don’t have it, get into a joint venture with someone who has it and learn the ropes…”

Indar added, “We need to develop Guyana’s capacity, not have companies come and set up shop front. The same way they come and set up shop front is the same way they come and leave…”

FINANCIAL SUPPORT

The Georgetown Chamber of Commerce and Industry also questioned whether the coalition Government was able to insert into its contract with USA oil giant, ExxonMobil, provisions for financial support which would be assigned for the development of local products and services.

Indar told Kaieteur News that it will take more than just a mere policy paper to get oil giants to support local development. In this regard, he cited the case of Nigeria.

The GCCI President recalled that the Government of Nigeria did not depend on a policy paper to ensure ExxonMobil give monetary support for the development and support of its local products and services.

The administration ensured that this was negotiated upfront and placed it into the contract it signed with the oil king, he said.

It was this foresight that led to the country drawing down on millions of dollars recently for development purposes. ExxonMobil provided $975 million to support indigenous operators.

With the aforementioned in mind, Indar said, “I cannot say if our government has negotiated on Guyana’s behalf in this regard because we have not seen the contract we have been asking for, for some time.

“These things have to be negotiated upfront so that when you get into production, you have something you can go back to and say to the oil company, ‘you are supposed to help with a university wing; you are supposed to help with this or that…”

The GCCI President added, “But if you don’t, you won’t get it when the oil companies get into production. We are at a loss right now. We don’t know if the government did this for the nation.”

Strategic Advisor and former Minister for Energy in Trinidad and Tobago, Kevin Ramnarine, recently advocated that having a local content policy would not be enough.

He too, insisted that it must be backed by legislation if one intends to really compel companies to utilize local goods and services for the oil and gas sector.

LOCAL CONTENT POLICY

Guyana’s draft Local Content Policy has been criticized in recent months for lacking provisions which would safeguard against exploitation by companies.

The draft speaks nothing of how to avoid procurement fraud, conflict of interest and favouritism, among other crucial areas.

Instead, the draft 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 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.

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