Patterson promises Local Content Framework and SWF legislation by year-end

Three years after the first major oil find by ExxonMobil, the Government is yet to set up the Sovereign Wealth Fund (SWF) now termed the Natural Resources Fund as well as to table the Local Content Policy Framework legislation, but according to Public Infrastructure Minister David Patterson these critical pieces of legislation are expected to be tabled, passed and assented to by the end of the year.

“The National Resources Fund will be tabled and hopefully passed and supported this year. I am satisfied, and in Cabinet we had a full update on one outstanding issue and it will be here and in place long before any oil is drilled as well as the Local Content Policy. Before the end of the year, both will be up and running,” Patterson told a news conference on Friday.
In January, Natural Resources Minister Raphael Trotman promised the legislation by the first quarter in 2018, but it is yet to be delivered.
The Bill was drafted by the Commonwealth Secretariat and scrutinised by the International Monetary Fund (IMF), the World Bank as well as the Inter-American Development Bank (IDB).
The Natural Resources Fund aims to save funds for future generations; one way includes converting non-renewable assets into a more diversified portfolio of assets and to mitigate the effects of “Dutch Disease”.
A SWF is defined as pools of money derived from a country’s reserves, which are set aside for investment purposes that will benefit the country’s economy and citizens.
The funding for a SWF comes from Central Bank reserves that accumulate because of budget and trade surpluses, and even from revenue generated from the exports of natural resources.
Guyana’s international partners and others have urged that the fund be transparent, independent and non-partisan to better protect the Guyanese people.
Commonwealth Economic Adviser, Natural Resources Division, Dr Daniel Wilde, just last month said Guyana was on the right track in relation to the SWF.
“The main components were the relationship between the Sovereign Wealth Fund and the annual budget, ensuring that all petroleum revenues are transparently paid into the fund. The management of the Sovereign Wealth Fund, which ensures appropriate checks and balances and the Ministry of Finance is the overall manager on behalf of the Government, and that the Bank of Guyana is the operational manager. We also talked about the reporting arrangements and auditing arrangements, which should ensure that the fund is transparently and well, managed with a number of reporting requirements,” Dr Wilde said following a Cabinet briefing in April.
The Commonwealth expert, who has experience in helping to design similar legislation in other countries, added that reports compiled quarterly and annually to international standards “must be submitted to Parliament and be made public” .

Local Content Framework
As ExxonMobil prepares to officially commence production in 2020, there is a lot of preparatory work currently ongoing, which requires services tailored to the specific needs of the industry. Over the weeks, there have been intensified reports of the local companies being bypassed for contracts and services with foreign companies being favoured. In the past, ExxonMobil has indicated that it was working with over 300 local companies, but to date the names of those companies are yet to be released.
However, on Friday, Minister Patterson said that they have to be vigilant in terms of local content, and identified that there were companies that were eligible for work with Exxon which were not making use of the opportunities before them.
“We have companies that are eligible, but they are not applying and I know that in the maritime sector and know personally because I have had to go to them and get the documents and have them submitted to Exxon and I don’t know why. The onus is not only on Exxon, the onus is on us,” the Minister added.
He also asked for evidence of qualified local companies that would have applied for work with the oil giant and were unsuccessful, noting that they were yet to find any in the maritime sector. Additionally, he explained that he would have already assisted over 100 mariners to gain employment with Exxon as a part of utilising local content.
“In 2016-2017, I met with a group of sailors and they came to my office and they said they have some of the skills and I asked them to go around and every mariner, seafarers you know to write their names down, what they can do. We compiled a list of almost 200 persons and we sent this list to Exxon…of the 200, 100 have been employed in the maritime industry, but you will hear the complaint of someone saying that I am a sailor and I am not employed and it is the process and they have to be competent,” Patterson explained.
He added: “No one speaks about the employment. We have to be aware of the opportunities and we have to tap into it and it is not the responsibility of Exxon to go knocking on the doors of people offering jobs.”
According to the draft Local Content Framework document, the policy seeks to address the suite of opportunities that may arise and the approaches to be taken in selecting and developing opportunities related to enhancing the capabilities of Guyanese nationals and businesses through training and well-tailored social contributions for greater impact and benefits among others.