Local Content Policy… UK Consultant ignores recommendations to give Guyanese advantage in oil sector

Feb 25, 2020 News

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By Kiana Wilburg

Guyana’s Local Content Policy is under heavy criticism for its restrictions on disclosing in full, the plans and reports oil companies submit to the government on the extent to which they use local, goods, services and skills for their operations. But that is not all that is troubling the document.

Following a perusal of the policy, it was observed that UK Consultant, Dr. Michael Warner, who has ties to ExxonMobil, ignored key recommendations that would have given Guyanese a clear advantage in the oil industry.
These recommendations were made by this newspaper to the Energy Department, drawing on the Ghanaian Local Content Policy. In the chart attached to this news item, readers would be able to see the Ghanaian policy provisions that were recommended for Guyana’s policy to adopt so that Guyanese can benefit to the maximum extent.

Provisions that were recommended to be taken onboard from the Ghanaian Local Content Policy
Similar provisions in Guyana’s Local Content Policy

1) In the case of non-Ghanaian ownership and operations, the entity must provide for the participation of a citizen of Ghana in an interest of at least five percent in the exploration and production activities under petroleum licenses. The interest of the citizen of Ghana shall not be transferable to a non-citizen of Ghana.

ABSENT

2) In order to ensure increased financial benefits to Ghanaians, and the Ghanaian state, all operators in the oil and gas industry, shall as far as practicable use goods and services produced by or provided in Ghana for their operations in preference to foreign goods and services. The Operators shall give priority to the purchase from citizens of Ghana local products and services that are competitive in terms of price, quality and timely availability. A preference for Ghanaian entities, even if they are up to 10% more expensive is mandated. ABSENT

3) Where bids are being evaluated, and where bids are otherwise equal, the bid containing the highest level of Ghanaian content shall be selected.
ABSENT

4) Where a foreign entity is to provide goods and services for the licensee, the foreign entity shall operate from Ghana and partner with a Ghanaian owned and registered company. After the commencement of operations, the participation of Ghanaians shall be at least ten percent by value in the provision of goods and services or as may be prescribed by regulations. The percentage contribution shall increase to at least twenty percent in the second year and shall increase by at least ten percent each year thereafter or as may be prescribed by regulations. These targets shall be assessed and revised annually as part of the regular assessment of the Annual Local Content Plan to determine the progress of national entities relative to their competitiveness with respect to price, quality, and timely availability and other commercial terms. (“Operate from Ghana” means that the foreign entity shall be incorporated under the Companies Code, 1963, Act 179.)
ABSENT

5) In order to ensure competitiveness of Ghanaians in the provision of the full range of services required in the oil and gas industry, the local training and technical institutions will be supported by both Government and the petroleum operators to develop the requisite capacity to international standards to be able to train Ghanaians to comparable high levels as required by the industry in drilling and support services, marine, catering and housekeeping, supplies and other support services. This measure will focus on all aspects of training, including the following: (i) Lower skill artisanal training such as welding, catering services; (ii) Middle-level skill training of technicians to provide maintenance services, offshore and on shore drilling etc.; (iii) High level skill training including general management, engineering design, procurement and business strategy development.
ABSENT

6) Attention will also be given to technology development skills towards indigenization of oil and gas technologies. High level seminars and workshops will be used to create the necessary awareness and interest of local businesses in the development of the requisite technologies and provision of technical support for the oil and gas industry.

ABSENT

7) An Oil and Gas Business Development and Local Content Fund will be established to support local capability development aspects of the local content framework. The fund will be used primarily for education, training and research and development in oil and gas. Sources of the fund will include contribution from Licensed Operators (at amounts specified in the applicable Petroleum Agreements), Oil and Gas Revenue, levies, grants and other support from Ghana’s Development Partners. The Ministry of Energy or the Ministry responsible for petroleum will oversee the disbursement of the fund.-
ABSENT

8) The Operator shall, within twelve months after the grant of a licence (or effective date of a Petroleum Agreement), submit to the relevant Regulatory Agency for approval, a detailed Annual Recruitment and Training Programme for recruitment and training of citizens of Ghana in all job classifications and in all aspects of petroleum activities, which may be carried out in or outside the country.

The Annual Recruitment and Training Programme shall ensure that the following targets are met :
(a) management staff, at least fifty percent of the management staff are Ghanaians from the start of petroleum activities of the licensee and the percentage shall increase to at least eighty percent within five years after the start of the petroleum activities;
(b) core technical staff, at least thirty percent of the technical staff are Ghanaians from the start of petroleum activities of the licensee and the percentage shall increase to at least eighty percent within five (5) years after the start of petroleum activities and ninety percent within ten (10) years; and
(c) Other staff, one hundred percent are Ghanaians. Such programme shall provide for the training of Ghanaians in all aspects and phases of petroleum activities and as many staff categories, including management, as is possible and shall be reassessed and revised on an annual basis (the “Annual Recruitment and Training Programme) and may include scholarships, industrial training for students and other financial support for education.

ABSENT

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