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Talks ongoing for extension of local content requirements to mining sector – GMSA 2nd Vice President
By Shervin Belgrave
Kaieteur News – Talks are ongoing to have the country’s local content policy, which is exclusively for the oil and gas sector, be extended to the mining and other sectors, second Vice President of the Guyana Manufacturing and Services Association (GMSA), Dr. Vishnu Doerga said on Tuesday.
Second Vice President of GMSA, Dr. Vishnu Doerga
Doerga was at the time addressing a Jamaican delegation led by the Island’s Minister of Industry, Investment and Commerce, Aubryn Hill, during a “Doing Business in Guyana Session” held at the Marriot Hotel.
The Jamaican Delegation is currently on its second trade mission to Guyana and is focused on the construction, technology, tourism and finance sectors. The team is also looking to lend support to Guyana in the identified areas the country needs training in.
A member of the visiting delegation asked Dr. Doerga if Guyana’s Local Content requirement is needed for sectors outside of oil and gas.
The GMSA second VP responded that at the moment, Guyana’s local Content policy is only for the oil and gas sector while adding “but there are talks about getting some of these local content requirements extended beyond oil and gas, perhaps in mining”.
Guyana’s Local Content law for its petroleum sector requires that foreign companies wanting to do business in Guyana must partner with a local. The law also mandates that the local partner must own at least 51 percent shares in the joint venture and 75 percent of the managerial staff must be Guyanese.
None of these requirements, however, are needed for the mining industry or any other sector. Although foreign mining companies working in Guyana would employ a large number of Guyanese, they still rake in majority of the profits because the mining concessions are fully owned by them.
Dr. Bharrat Jagdeo
Last year, calls were made for the government to extend local content requirements into the mining sector and other industries but Vice President, Dr. Bharrat Jagdeo dismissed those calls.
In July 2022, Kaieteur News had reported that the Vice President was asked at GMSA mid-year dinner held at the Princess Ramada Hotel whether his government would consider extending the local content requirements into the mining, bauxite and other major industries.
In response, Guyana’s VP had said “Right now, that is not on the cards. We promised in the manifesto that we will do it for the oil and gas industry but if we do this in every sector of the economy then we can kill the national momentum that we have and right now the answer is no, we are not planning to do that for any other sector at this point in time”.
To support his point of view, Jagdeo explained that as it is, the government is having a difficult time administering the local content laws in the oil and gas sector, because it is now in the process of learning.
He had noted that Guyana has to build its capacity and pointed out that the government also needs to take into account that the country is part of the World Trade Organisation (WTO) and the Caribbean Community (CARICOM).
With that said, Jagdeo reasoned that it is not desirable to implement the local content legislation in other sectors because it can create a reciprocal behaviour for Guyanese investors abroad or alternately the foreign countries can put up trade barriers, countervailing taxes to prevent Guyanese products from going into their markets.
“So it’s not desirable but for the oil and gas industry, we thought it was necessary because frankly speaking, these oil and gas companies have a pattern of behaviour that they find it very convenient to work with big companies, and often foreign companies. They don’t make the necessary or the effort or additional effort to grow local companies and we believe the law has to force them to do that,” the Vice President had explained.
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