Govt. Consultant changes draft Local Content Policy to suit foreign companies -Energy Dept. hides document from general public, only sends it to select few to peruse

Sep 08, 2019 News

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By Kiana Wilburg
When Trinidadian Consultant, Anthony Paul had completed the second draft of Guyana’s Local Content Policy back in May 2018, several provisions were included to ensure preferential treatment of locals. According to Paul, those provisions were inserted, taking into account, some of the mistakes his country would have made on the issue of local content.
But when time came for the final draft to be completed, the coalition administration selected British Local Content Consultant, Dr. Michael Warner for the task. For $22M, Dr. Warner not only removed key provisions that put Guyanese first, but also excluded from it, any recommendations for sanctions against foreign suppliers if non-compliance is discovered.
Kaieteur News was able to identify same after comparing the second draft with the one that Dr. Warner did.
In Paul’s draft, a strong case was made for ensuring foreign suppliers partner with locals. The Trinidadian said that partnership is crucial in ensuring the transfer of knowledge and technology. The International Energy and Strategy Advisor called for minimum requirements to be set for ownership through equity participation in joint ventures.
But in the final draft that was done by Dr. Warner who has connections to ExxonMobil, foreign companies will not be mandated to partner with local firms. In fact, the draft policy states, “…it is the policy of the Government of Guyana to not mandate local-foreign joint ventures as a requirement for market access in the upstream petroleum sector, but instead to encourage such alliances…”
TAX BREAKS
In Paul’s second draft, the Trinidadian noted that there needs to be a leveled playing field when it comes to the payment of taxes, hence his recommendation that foreign suppliers should be made to pay their fair share. Paul went as far as to outline a mechanism by which Guyana could capture taxes from the foreign suppliers. He said that the foreign companies doing business as agents, contractors, or sub-contractors to operators should be required to register a local company and pay taxes in Guyana.
In Guyana’s third draft however, Dr. Warner removed this provision. In fact, not a single suggestion was made for locals to get the same tax breaks as the foreign suppliers so that they can have a fair shot at being competitive.
CONFIDENTIAL
In addition to removing provisions that level the playing field for tax payments, Dr. Warner went a step further by proposing that the local content plans of foreign companies be protected by confidentiality provisions.
Dr. Warner specifically stated that the Business Minister shall only disclose to the general public, whether or not; operators have submitted yearly Local Content Plans and half-year and end-year Local Content Reports. Other than that, the Business Minister must keep the contents of plans under wraps.
In Paul’s second draft however, no such call was made.
In fact, the Trinidadian’s draft policy is the only one that is in conformity with a report from the United Nations Development Programme (UNDP) which called for tax breaks for local companies and joint ventures between locals and foreign suppliers, among other things.
Dr. Warner’s draft policy is essentially, in complete defiance of the UNDP’s recommendations.
HIDDEN FROM PUBLIC
When it was time for consultation, the first two drafts of the Local Content Policy which were done by Paul, were made public. The drafts were posted to various government websites and commentary from citizens was invited.
In the case of the third draft that was done by Exxon’s former employee, it was only sent to a handful of stakeholders for their input by the Energy Department. Up to the time of publication, that document was not on the website of the Ministry of the Presidency or the Business Ministry for citizens to access.
AWARD TO WARNER
It was in February, last, that Director General of the Ministry of the Presidency, Joseph Harmon, had announced that Oil Consultant, Dr. Warner, was hired to complete the policy. He was given the contract even though he has no track record of independently producing a local content policy for a country.
Subsequent to that announcement, Kaieteur News had confirmed with former Business Minister, Dominic Gaskin, that this contract was never advertised.
Kaieteur News had also raised several questions about Dr. Warner’s connection to ExxonMobil; the firm which brought him to Guyana in the first place to train local businesses trying to access the supply chain. Dr. Warner was actually a fixture at Exxon’s Centre for Local Business Development on South Road for this matter.

 

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