Local content policy needed now to capitalise on investments – new GCCI President

…should be backed by robust legislation

Oil companies are moving deeper into operation both onshore and offshore Guyana, and with extraction already taking place, a local content policy should be implemented immediately to capitalise on the elevated spending. It should be one that is backed by dynamic legislation.

Newly-elected GCCI President Timothy Tucker appeared on a GlobeSpan 24×7 programme on Wednesday evening, and shared these views while lobbying for an all-inclusive local content policy to better superintend the country’s petroleum industry and other extractive sectors.
He said the onus is upon policy makers to determine how the document should be implemented in the country, but it is an immediate need if Government wants to capitalise on the oil industry.
“Guyana has more than one extractive industry, and a strong local content (policy) is required, especially when the cost of electricity goes down, when all the different benefactors of an oil economy will garner internally that you will need a national local content policy. There might be a requirement for a phasing of it, but it is to be determined by the policy writers. The fundamental of it is (that) you need a national local content policy. You need local content immediately in the oil and gas sector, so that we can capture the things that we need to capture locally,” Tucker detailed.
From his vantage point, the GCCI President shared that the oil industry is at the height of its spending, with investments being injected to cover exploration and other initial activities. In time to come, these will cease, once extraction starts. Therefore, the country must capture these revenues.
Moreover, he added that as Guyana’s financial status moves up the ladder, less funds will become accessible – an indication that extensive planning is needed for long-term development and infrastructure.
“That whole exploration-to-production stage is where a majority of the money is spent, and we have a few additional development wells that are going. That whole connection is where the bulk of the money [is]. When the oil is found and the FPSOs are put in place, that high spending will come down and level off. By that time, we must capture the bulk of the spending.
“We are at the point where we’re somewhat halfway through the door, so to speak, in terms of our development. We are (an) upper middle-income economy. By having that status, we don’t qualify for a lot of things. A lot of funding that we get, we’re about to not qualify for that, because of our economic status as a country. So, when you now have that and more Government spending, majority of the money Government will earn will be from oil and gas-related and the development of other things,” he added.
Tucker was keen to note that local content framework must be supported by robust legislation in order to hold companies accountable for hoodwinking the country and draining resources without any security for the people.
He stressed, “We don’t want to be in an isolated state where we can only encourage nationalism, but at some point…. Long we’ve wanted development, so when we get development, we must benefit from it. It mustn’t be like so many of the other countries, where people come in, develop themselves, and then there is no development in that country. You have to have legislation, and you must have consequences when you have players that are not adhering to the local content guidelines; companies that are trying to hoodwink the nation, or companies that just plain out refuse to adhere to a policy, then you have to have repercussions for those actions.”
President Dr Irfaan Ali has led consultations on Guyana’s local content framework, where he emphasised the importance of ensuring that companies can be held accountable to the provisions of the policy.
For better context, the President had explained that it is not just oil and gas, but all sectors that will see foreign direct investment. Ali also noted that although the policy should have maximum benefits for locals, it should not deter foreign investors.
“We are not here to say that we want to minimise foreign investment; that will be to our detriment. But we want the investors who are coming in to recognise that, through legislative mechanisms; through regulations; through institutions, they have to commit to local content; and not only (commit) to local content, but we are going to move with you in setting targets as to the levels of local content,” he was quoted as saying earlier this year.
This month, the Natural Resources Ministry concluded a series of strategic engagements with various stakeholders on the revised draft policy. (G12)