‘Limited’ Local Content Policy released

…to only deal with upstream oil & gas sector
…database of labour market, suppliers among proposals

The second draft of the Local Content Policy (LCP) has been completed by the Energy Department after months of work on the document, but the Policy itself admits that it does not deal with mid and downstream oil and gas initiatives but rather, the direct, upstream parts of the sector.

Head of Department of Energy, Dr Mark Bynoe

Local Content Policies are supposed to cater to not only the limited amount of local workers who can be hired on drill ships, but rather the development of businesses and opportunities for persons on the outskirts of the oil and gas action.
According to page three of the document, however, “this current Policy framework is therefore limited in its scope to the upstream petroleum sector and currently is not intended to address directly or in their entirety the following policy areas”.
“Mid and downstream petroleum sector opportunities, other policy issues related to the upstream petroleum sector— such as health, safety, security, environment, community impacts, tax and fiscal matters and other petroleum-related national issues, such as national development and planning”.
It defends this approach by pointing to the scale of the emerging opportunities in the upstream oil sector and the urgency of developing a policy. As such, the Department noted that the Policy was just a preview to the Government’s overall policy for the sector and would be updated as time goes by.
One of its most important proposals is for the Government, operators and contractors to work towards maintaining information on the local labour market, to ensure that the availability of qualified Guyanese can always be ascertained.
Another proposal is for them to also work towards creating a database of up to date information on local suppliers and sub-contractors. This way, foreign companies can find suppliers with the capacity to support their oil sector operations.
“This may include Government or operator provided industrial baseline studies, or similar information generated by government-sponsored or operator-sponsored business development organisations and supplier forums,” the Policy states.
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.
Indar had noted that while this third draft is a “step up” from the previous two, there is 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 LCP 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.
To this end, the immediate GCCI past President posited that local content needs to be looked at in the context of now and not in the future.