GCCI urges penalties for companies who don’t follow Local Content Policy

– says “good faith”, “handshaking” not enough to ensure compliance
– calls for setting up of Local Content Dialogue Commission

After perusing and holding discussions on the third draft Local Content Policy, the Georgetown Chamber of Commerce and Industry (GCCI) has identified a number of weaknesses within the policy, including the most obvious one – the lack of penalties for delinquent operators.

GCCI wants penalties for oil companies who flout the Local Content Policy

The policy is intended to hold operators accountable to their commitments and international principles of providing employment and business opportunities for Guyanese. But with no penalties to ensure operators follow through, GCCI noted that “handshakes” and good faith are not enough.
“The Local Content Policy does not speak to anything regarding penalties for companies which fail to report or follow the commitment to Local Content. Good faith and handshaking cannot suffice.”
“Whilst there does not need to be the inclusion of details of penalties in the Local Content Policy, there ought to be some mention of what the penalty in a general sense will look like should there be violation.”
One of the GCCI’s recommendations is for a fine to be imposed on such operators who fail to comply with the order. This fine, according to GCCI, should be a percentage of an identified indicator.
“In addition, there should be a general policy on dealing with foreign companies which will affront Guyanese partners simply to obtain local content treatment in situations where the company is not materially a Guyanese. The Local Content Policy is the document which needs to set out a general guiding principle as to how these situations will be dealt with.”
The GCCI also noted that the essential role of the policy is to create value for the local business sector and Guyanese in general. But with the responsibility of monitoring this placed under the Ministry of Business, the Chamber called for the creation of a separate agency.
According to GCCI, the agency, the Local Content Dialogue Commission, should have responsibility for overseeing the policy’s implementation. It recommended that the Commission be made up of Government, operators, civil society, academia and the Private Sector.
“Guyana’s Natural Resources are the national patrimony and whilst the State has the function to advance the welfare of the Guyanese people, there are other extremely important stakeholders in the petroleum sector and national development process. These include the aforementioned, who should be included on the Commission.”
Another issue with the policy which the GCCI highlighted is allowing the subject Minister to grant approvals automatically if reviews of applications are not completed in the requisite timeframe. The GCCI urged a review of this section.
“This equates to a company being given an automatic approval until and unless some serious objection is raised by the Minister. This fundamentally distorts the power which the Sovereign has. There needs to be a comprehensive review of this language in this section as no approval should be automatically granted.”
In addition, the Chamber noted that despite alluding to local content legislation, there is some uncertainty as to when this will be done. According to GCCI, the policy should set out timelines for the completion of legislation.
“There is the allusion of the introduction of legislation into the framework of local content governing Guyana. The introduction of legislation into the framework is impeding,” GCCI said in its assessment.
“To ensure that credible signals are sent to the local and foreign Private Sector, an estimated timeline of the introduction from local content legislation should be made pellucid in the Local Content Policy at this juncture.”
Already, concern has been expressed about the number of foreign companies coming into Guyana and outmanoeuvring local companies. Whether it is using their increased access to capital or setting up shell offices, this concern has led some to criticise the Government for the delay in setting up a local content framework.