The local content policy for the supply of goods and services to the oil and gas industry offer lucrative opportunities

Jul 18, 2021 Consumer Concerns, News

CONSUMER CONCERNS…

By Pat Dial

Kaieteur News – The discovery of oil deposits in any country for the first time always comes with an unexpected suddenness and the subsequent development of an Oil Industry comes with similar speed. All Third World countries, which discover oil reserves, are inevitably caught in a syndrome of unpreparedness and Guyana was no different. Many countries continue to remain in a state of dazed unpreparedness for decades during which time foreign companies providing goods and services ancillary to the Oil Industry set themselves up reaping a bonanza which the entrepreneurs of the host country could have shared if they understood more clearly what was happening and were given a bit more time for preparation to enter the market. The reason why the Oil Industries and the ancillary companies which serve them have the mobility of being able to set themselves so quickly in any part of the world is simply that oil prospecting companies and their ancillary companies are comparatively few in number and are already operative in some other part of the world. Local or smaller businesses could never have this advantage.
In the first few years after the discovery of oil, Guyana was indeed in a state of dazed unpreparedness and Vice President, Dr. Bharrat Jagdeo, summed up the situation in his remark that under the previous government foreign companies were able to take over almost every sector. Fortunately, for Guyana, there are two or three persons in Government who are able, experienced and knowledgeable and have a fairly deep insight into the workings of the international Oil Industry. It was therefore no surprise when Vice President Jagdeo declared on behalf of his government that they were formulating a Local Content Policy, which would soon be manifested in Legislation.
In September last year, as soon as the new government acceded to office an Advisory Panel consisting of Dr. Shyam Nokta, Carl Greenidge, Anthony Paul, Kevin Ramnarine, Carville Duncan and Floyd Haynes was appointed tasked with reviewing existing initiatives and policies pertaining to Local Content in the petroleum sector and provide guidance for the development of Guyana’s Local Content policy and legislation. The work of the Advisory Panel would be supplemented with broad based consultation with all relevant stakeholders and segments of civil society. The Ministry cautiously summed up the process declaring, “Having realistic and pragmatic targets in place is crucial before any action is placed towards Guyana’s legislative framework. Essentially, these targets will serve as a schedule of Local Content legislation.”
Vice President Jagdeo was more detailed. He pointed out that the Policy and the legislation, which enshrines it, provide more opportunities for the growth and development of local companies. “There are some sectors which we are putting into the Law that could only have Guyanese businesses competing against each other . . . areas such as landscaping, logistics, transportation, food supplies, cleaning services and rentals will be reserved for Guyanese investors and players. . . Guyanese businesses will also benefit from a guaranteed percentage of operation in all other sectors.”
In addition to generating greater wealth and employment, the Local Content Policy will help to further Guyana’s economic transformation and stimulate partnerships between local and international companies, which will encourage major investments and facilitate knowledge transfer.
Guyana remains ahead of several other oil and gas producing countries in its serious development of a Local Content Policy. Several of them have no such policy as yet and it took decades for others to establish a well-balanced regime of such policies. Trinidad and Tobago, for example, took nearly a century to create the comprehensive plan they have and Suriname, though they have had an oil and gas industry for several decades, are only now beginning to craft a policy. Guyana cannot indulge in self-congratulation but must keep fully focused on effectuating the Policy.
The Guyanese entrepreneurial community needs to be more proactive in seeking out and taking advantage of the many lucratively advantageous openings as the oil industry develops.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)