Guyana still awaits crucial Local Content Policy …Ram questions what could possibly be Granger’s excuse now

Aug 12, 2018 News

Chartered Accountant, Chris Ram

Since the discovery of oil and gas in 2015, there has been considerable talk about how Guyanese will fit into the supply chain. A Local Content Policy was supposed to guide this process. But years later, the country remains without a finalized version of this crucial document.
Pointing this out recently was Chartered Accountant and Oil and Gas Academic, Christopher Ram.
He said, “Three years after the famous discovery announcement, the Granger Administration has failed to ensure the local content requirements established by law or to pass a single piece of legislation pertaining to petroleum operations directly, or indirectly with respect to the environment, labour or other rights. Or to formulate a depletion policy, consider alternatives to the production sharing agreement or address its mind to a national refinery given the new and increasing volume of proven reserves.”
He also questioned what possible excuse the President and his Government by extension, could have for the failure to address this matter which a sense of urgency.
As stakeholders in the oil and gas industry eagerly await consultations on the second draft of Guyana’s Local Content Policy, Chatham House Advisors, Anthony Paul and Renee Roger Tissot have highlighted that there are some common pitfalls which should be avoided.

President David Granger

In a comprehensive research paper, the local content experts cited poorly defined or inconsistent terminology as a major hindrance to the success of local content implementation. In this regard, they said it is imperative that governments have consistent definitions of the terms: local content, local company or supplier, and nationals/ locals. The experts said that these terms often have different meanings in trade agreements, treaties and in government procurement legislation. They said that definition is critical to target setting, measurement and performance management.
Tissot and Paul also noted that the lack of strategic direction is one of the most obvious pitfalls. In this regard, the Local Content Experts explained that policies that fail to consider long-term objectives in regard to industrialization, economic diversification and strengthening of value creation may focus on the easy ‘low hanging fruit’ of local content activities and miss out on opportunities to create in-country value.
The experts noted that priority is sometimes given to low value added activities with limited capabilities for transfer into other sectors. They said that these opportunities often cause short-term local economic booms that tend to be more disruptive to the local population in terms of a surge of consumption and localized inflation, and create community resentment toward those employed in the temporary oil activities.

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