Angola, Azerbaijan set aside oil jobs, procurement for its citizens - PPP/C Govt. can do same for Guyanese

Angola, Azerbaijan set aside oil jobs, procurement for its citizens – PPP/C Govt. can do same for Guyanese

Nov 03, 2020 News

Local Content Policy …

By Kiana Wilburg

Kaieteur News – As Guyana continues efforts towards creating a robust local content policy that would be supported by legislation, there are several examples within the industry that the Government can use as a guide to ensure its citizens have every possible chance of being given first preference in the oil sector.
According to a study that was procured by the World Bank and written by Silvana Tordo, its lead energy economist along with other consultants, Angola and Azerbaijan are two countries whose local content policies provide examples of how others may go about creating the environment for citizens to benefit the most from the sector.
In the case of Angola, the study noted that the dominant secondary legislation for local content is Ministerial Order No. 127/03 on the Contracting of Services and Goods from Angolan Companies by Petroleum Industry Companies.
The regulation reserves certain categories of procurement expenditure to Angolan companies, including logistics, catering, pressure tests for storage tanks and pipelines. It also identifies spending categories that fall under a “semi-competitive regime,” where bidding by foreign suppliers and service providers is predicated on these companies first forming joint ventures with Angolan companies.
Expenditure reserved for this category falls in the area of geophysical sciences, drilling controls and fluid analysis, and the operations and maintenance of production facilities. The law also seeks to establish a “competitive regime,” which places all other categories of expenditure into international competitive tender, yet provides for “Angolan state companies and/or private companies the right of first refusal, provided that the value of the relevant bid is no more than 10 percent higher than those of other companies.”
With respect to ensuring first preference is given to the use of locals in the oil sector, some countries focus on employment regulation which is one of the most commonly used tools in local content policies.
According to the World Bank study, such regulation may be accomplished through the imposition of minimum local employment obligations, minimum salaries, and training requirements; the reservation of certain jobs or levels for citizens; the restriction of certain jobs/ levels to citizens; and the oversight of work visas.
The study pointed out that Azerbaijan is a classic example of how an oil producing country may use employment regulation to ensure first preference is given to its citizens. The country’s laws state that where export-oriented oil and gas operations are expected to last for more than six months, it is required that the company employs at least 80 percent Azerbaijani citizens at all staff levels.
Kaieteur News understands that the regulation applies to all contractors and subcontractors.
With the foregoing in mind, industry experts such as Dr. Remi Piet, Co-founder of Embellie Advisory and Faculty member at the University of Miami and HEC Paris in Qatar, agreed recently that indeed, Guyanese authorities can use these and other provisions to ensure locals are given first preference in the industry.