Guyana’s LCP provides excellent opportunity to build national capacity – IDB report

A recent independent report launched by the Inter-American Development Bank (IDB) outlined that Guyana’s Local Content Policy (LCP) represents an excellent opportunity for the country to help build its national capacity.
The report: “Traversing a Slippery Slope: Guyana’s Oil Opportunity”, which was authored by analysts Lenin H Balza, Emily Brearley, Dillon Clarke, and Victor Gauto, stated that Guyana has a very narrow window to get right what other countries in the past have struggled with over decades.
“It is then imperative that authorities embrace the lessons learnt by countries that have had successful hydrocarbon sectors and avoid the mistakes of those that have failed to create long-lasting value,” the authors warned.
According to the authors, local content policies have been adopted in many countries with excellent results wherever properly implemented. They argued, however, that for success to be achieved, a local content policy “must be neutral and transparent to avoid bureaucratic delays or unintended interpretations by users”.
They suggested that beyond the immediate need to improve the quality of life of citizens, for the medium term, the authorities may consider designing a formula to work with the Private Sector and civil society to upgrade and train workers for the petroleum sector.
According to the authors, given the small size of the existing civil service and the lack of expertise in hydrocarbons, “it is inevitable that international personnel will need to be hired to essentially run the national counterpart of powerful private companies”.
However, they explained that over the medium term, “national personnel can shadow and be trained by international experts, and a comprehensive plan for civil service training in the hydrocarbon industry can be developed to create a world-class, special-purpose, independent regulatory agency”.
Not long after taking office, President Dr Irfaan Ali assured that his Administration would take all the necessary steps to put the legal and regulatory framework in place to ensure that Guyanese enjoyed maximum benefits from the country’s rich oil resources.
It was with this in mind that the Government moved to establish a high-level team of experts to advise on the formulation of a strong local content policy. The Local Content Advisory Panel is chaired by Guyana Manufacturing and Services Association (GMSA) President Shyam Nokta and include former Foreign Affairs Minister Carl Greenidge, former Trinidad and Tobago Energy Minister Kevin Ramnarine, former Public Service Commission Chairman Carvil Duncan, Floyd Haynes and Dr Anthony Paul.
President Ali had explained that the panel was expected to conduct an expansive consultation and review and devise recommendations that would inform the country’s LCP.
While the Head of State acknowledged that there was much to be done in terms of capacity building among local stakeholders, he said with the right mix, which includes technology transfer and partnership between experienced companies and the local Private Sector, a sustainable and lucrative pathway could be achieved.
“I strongly believe that Guyanese must play an integral role and benefit from the fortunes of the sector,” President Ali had said.
Meanwhile, the authors of the IDB report pointed out that with an estimated eight billion barrels of oil and a projected fiscal windfall of US$49 billion in revenues over the next few decades, Guyana is poised to become a major player in regional and international energy markets.
They contended that it was undeniable that Guyana’s hydrocarbon discoveries would usher in a paradigm shift that would reshape the country’s development trajectory.
However, they were quick to underline that “the direction and magnitude of transformations will depend on a combination of cohesive policies and strong institutions to ensure the realisation of optimal value capture from resource exploitation and mechanisms for benefit transfer to all segments of Guyanese society, for this generation and the next”.