Conduct thorough assessment of country’s needs before finalizing Local Content Policy – World Bank

Oct 08, 2018 News

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By Kiana Wilburg

A Local Content Policy is one mechanism that can contribute to ensuring oil industry benefits reach the population. But it would be pointless to adopt or finalize such a policy without first conducting an assessment of the nation’s deficiencies in serving this sector.
This was recently noted by the World Bank. In fact, the financial institution said that one of its assessment tools called the Strategic Environmental and Social Assessment (SESA), can give a comprehensive diagnostics of vulnerable populations in producing areas, with baseline data on skill levels and local business capacities in responding to the oil sector.
Further to this, the financial institution noted that this data would also be useful to determine the type of vocational skills training programmes linked to the oil industry that the local population could benefit from.
It said, too, that the assessment tool is crucial since the information obtained from it, contributes to sustainable economic growth in the area where the oil or gas project is developed by: generating awareness of environmental and social issues; improving transparency in relation to hydrocarbons developments; increasing trust among local stakeholders; and giving a voice to some stakeholders who might have been sidelined in the past. It said that these tools are also functional for preparing the field for participatory development planning.
CRITICAL ELEMENTS MISSING
In its current state, the second draft of Guyana’s Local Content Policy has been criticized for missing critical elements. In fact, the document is more a statement of principles. This was noted by Mark Wenner, Elton Bollers, and Roger Hosein; the authors of a special report that was sponsored by the Inter-American Development Bank (IDB).
In the report, the authors recall that in April 2017, the Ministry of Natural Resources formulated a draft Local Content Policy that promoted the use of local goods and services in the oil sector, as well as training of Guyanese for the industry.
The authors of the IDB report noted however that the language in the draft policy is general and vague. The report says, “No concrete targets or performance metrics are provided. The draft calls for some regulatory body to be established to establish metrics and to ask ExxonMobil to give preference. (But) much more specificity and elaboration are needed in this area.”
It adds, “Other countries for example, require an increased percentage of local purchases of goods and services, the placement of nationals in training/shadowing technical positions, specific amounts to be devoted by the oil/gas operator to scholarships and job training programmes, affirmative action employment programmes, set-asides for local engineering, accounting, and surveying firms, and others.”
The IDB report stressed that none of these elements are included in the draft, which is more a statement of principles. It also notes that the state must ensure that there is an adequate local content policy and that it does not just import everything it needs, or every worker required.
LOCAL CONTENT POLICY STATUS
Business Minister, Dominic Gaskin has acknowledged on several occasions that Guyana’s Local Content Policy should have been completed a long time ago. He noted however that there are certain challenges, which are affecting the process to finalize the document.
The most significant he said relates to finding the funds to pay a consultant to complete the task.
Gaskin said, “When we took on the job of finishing this document, we did not budget for it. It was handed to us in early 2018, months after we had put together our budget. Plus, when we got it, the contract with Trinidadian Oil Expert, Anthony Paul came to an end. Paul fulfilled his terms. We are in need of a consultant. But we just don’t have the funds.”
The Business Minister said that he is now looking to the Ministry of Finance or international aid to help fund finalization process for the policy. He also emphasized that ExxonMobil would not be approached for funds.
In the meantime, Gaskin said that several stakeholders such as the Georgetown Chamber of Commerce and Industry (GCCI) were consulted on the second draft policy. He said that the Chamber is supposed to make a presentation to the Business Ministry on their amendments for the second draft.
The Minister said, “But in the absence of a Local Content Policy, I don’t think our businesses need to be scared or fearful that countries are going to come and hijack everything. I am not paranoid about it and they don’t have to be. Don’t think all foreigners are your enemies. People will go where there are opportunities and we need to start doing the same thing and be aggressive…”
Gaskin assured that the Local Content Policy will be ready in early 2019.

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