In crafting a Local Content Policy (LCP) for Guyana, it is our position that Guyana should consider the efforts of similarly situated countries in the O&G and other extractive industries. The following is adapted from the LCP of Tanzania and starts with their “main objective”: to provide the guiding principles for maximum engagement of local content and local participation in the development of the oil and gas industry to ensure optimal benefits to the country.
This is supported by five specific objectives: (1) Capacity Building and technology transfer, (2) Participation of Guyanese and Guyanese owned entities; (3) Procurement and usage of locally produced goods and services; (4) Fabrication and manufacturing in-country; and (5) Socio-economic responsibilities. Today, we present objectives 1 and 2.
From a policy standpoint the government must ensure every player in the oil and gas supply chain and value chain puts emphasis on local participation; ensure that there will be specified thresholds for local participation in each stage in the value chain; and ensure local firms have full and reasonable access to procurement opportunities.
To achieve the objective of capacity building and transfer of technology, the first issue for the government would be to facilitate the enhancement of the capacity of local firms to participate and become internationally competitive through their empowerment to meet the needs of the oil and gas industry. The government can insist that appropriate technology be gradually transferred to Guyanese for managing and operating the oil and gas industry. Towards this end, local training institutions should be facilitated to deliver the requisite curriculum relevant for oil and gas industry with an eye towards lateral technology transfer for the coming infrastructural boom.
Then there will be the entry of foreign firms with experience in O&G, which has already been far advanced under the APNU/AFC government. These entities must be required to provide for the participation of locally owned and operated firms with a specified minimum share of interest in the O&G value chain activities. The interest of the Guyanese entity should not be transferable to non-citizens of Guyana. Taking lessons from other countries that have faced the challenge of “shadow shareholders”, the ownership structure of businesses must be carefully scrutinized to determine the authenticity of the Guyanese owned shares. All goods, services and materials imported for upstream, midstream and downstream oil and gas industry activities will have to be of certified standards and in addition to international standards also be in accordance with the Government Analyst Food and Drug Department and any other relevant authority established and operating under the Law.
Then there is the second issue of adopting new and appropriate technologies. The objective should be clearly stated that appropriate technology will be gradually transferred to Guyana to enable Guyanese to increasingly manage and operate the O&G industry. Technology and innovation are crucial for sustainable development of this industry. For the next decade Guyana will depend on technologies from multinational companies, which are hired on merit of their technological advancement and financial capability. To address that gap, contractors, subcontractors, licensees or other allied entities should be required to support and facilitate local capability development aspects of the local content framework. Operators, while carrying out operations should be required to prepare and implement plans for the transfer of technological know-how and skills relating to O&G operations to Guyanese. Emphasis may also be put on establishing in-country any necessary facilities for technology transfer.
The Government should articulate the following policy positions which they will implement: (i) Ensure Guyanese have adequate capacity to manage modern or requisite technology; (ii) Ensure that all players in the industry prepare capacity building programmes for training of Guyanese; (iii) Ensure affordable technologies from multinationals are available to develop the O&G industry; (iv) Ensure adoption of relevant information technology in all O&G operations by local businesses; and (v) Ensure there is an obligation to Licensees and their subcontractors to support local capacity building by direct financing. (To be contd.)