Half, year-end reports among measures to hold oil companies accountable

Local Content Policy

– to ascertain whether locals really being hired, trained

Concerns have previously been expressed that oil companies’ claims of hiring locals cannot be taken at face value, but must be vetted.

According to the Department of Energy’s recently-released Local Content Policy, half-year and end-of-year reports will be among the vetting measures.
According to the policy, these reports will be standardised and delivered by the companies directly to the subject Minister. The information companies put down in these reports will be measured against what commitments for local content they made in their individual local content plans.
“The half-year and end-year reports will be used to continuously review and refine the opportunities and constraints in developing local content in Guyana and to inform how Government and industry collaborate to drive local content development,” the policy also explains.
“Notwithstanding legal constraints that may prevent disclosure of reported information on local content to parties beyond the Minister, such as contractual and commercial confidentialities and obligations to anti-trust and anti-bribery legislation, the Minister shall disclose information on local content performance sufficient for Government to be held accountable for implementing this policy and for operators to be accountable for implementation of their local content plans.”
The policy also includes formats for how these reports will be prepared. For instance, the format dealing with Guyanese who were hired or trained by operators include tables for them to provide estimates of persons they were supposed to have hired or training hours for positions ranging from senior management and professional to semi and basic skilled, versus how many were actually hired or trained.
There are also sections where the operator has to declare how many contracts it awarded to Guyanese suppliers for the preceding half year versus how many it had anticipated awarding. In this way, the policy notes, companies can be measured by their actions.
But despite legal requirements for companies to meet local content expectations, the policy stops short of saying exactly how the policy will be enforced against delinquent companies who do not wish to honour their responsibilities. According to one source, a policy with no clear measures to ensure its implementation lets delinquent oil companies off the hook.
Section 36 of the Petroleum Exploration and Production Act specifies that a company can only be granted a production licence if its proposal for “employment and training of citizens of Guyana are satisfactory”.
The Act goes on to state that in order to be granted a production licence, an oil company’s proposals for procuring goods and services have to be judged as satisfactory by the relevant agency.
Last week, the Georgetown Chamber of Commerce and Industry (GCCI) facilitated a discussion on this policy. There, past GCCI President Deodat Indar lamented the fact that foreign companies, particularly those from the Caribbean region, are coming to Guyana and “mopping up” all of the opportunities coming out from the budding oil and gas industry.
In giving his critique, Indar had noted that while this third draft is a “step up” from the previous two, there are still a number of issues with the document. One of which, he explained, has to do with the ‘test of locality’ and the definition of local companies.
According to the former GCCI President, a local company cannot be one that is recently established, which is the case with many of what he referred to as ‘shop fronts’, that is, small companies being established with the ‘big guns’ behind them.
Indar noted that before the LOC was in the pipeline, the GCCI had drafted a policy on its own which outlined the four ‘test of locality’ components to determine a local company.
“A Guyanese company can’t be somebody just off the radar who go and register something at the High Court,” he noted.
Indar went on to say that the residency requirement of the Guyana Revenue Authority (GRA) Income Tax Act is 183 days in Guyana. This, he noted, is archaic.
“It only deals with individuals not institutions so what you have are laws in Guyana that are draconian, and the oil and gas activity and level development is 100 years up. How you gonna work like that? Those things have to change and deal with what you have in the country,” he stressed.