PSC to establish working group to address local content

– PSC, civil society, labour unions and political parties to participate

The Private Sector Commission (PSC) will soon be establishing a “Multi-Stakeholder Working Group” inclusive of civil society, labour unions, and political parties in an effort to broaden discussions on local content legislation in light of numerous concerns being raised countrywide about the lack of a local content policy and repercussions of such.

According to the Council of the PSC, recent calls for legislative protection that were made by the Georgetown Chamber of Commerce and Industry (GCCI) as well as the Guyana Manufacturing and Services Association (GMSA) have gone unanswered and the issue of local content continues to be of major concern to businesses.
As such, the Council, which comprises over 23 Private Sector organisations, convened its Trade and Investment Sub-Committee recently to discuss the concerns and to give effect to the call for local content legislation.
Following its deliberations, a decision was made that there be the establishment of the “Multi-Stakeholder Working Group” quite soon.
In September, Trinidadian local content expert, Anthony Paul had alluded to the fact that stakeholders’ calls were being ignored and that the Government’s Draft Local Content Policy (LCP) plan is essentially for foreigners.
Paul, who had been tasked with completing the first two drafts of Guyana’s LCP, had told the media that the tax breaks being granted to foreign subcontractors in the LCP third draft could only be viewed as “discriminatory to locals” and that this should be addressed either by a review of contracts or by law.
The Trinidadian local content expert is said to have emphatically outlined same in a report that he wrote on the request of the United Nations Development Programme (UNDP). That international organisation had commissioned this report for the Guyana Government and it was handed over in 2016. In that document, Paul had stressed that such exemptions undermine Guyana’s local content efforts.
In the same report, Paul had added that any Local Content Policy Guyana pursues should ensure all international oil subcontractors are made to have a local partner.
According to the Chatham House Advisor, it is in Guyana’s best interest to have a policy, which demands that such foreign companies collaborate with locals to get maximum local content impact.
In February last, Director General of the Ministry of the Presidency, Joseph Harmon had announced that oil consultant, Dr Michael Warner was hired to complete the policy replacing Paul. The cost of that contract was $22 million, a contract which the Government later admitted was never advertised.
Absent from the third, and supposedly final draft of Guyana’s Local Content Policy, are three key things which stakeholders have long called for.
First, it was found out that there is no recommendation in the draft for local companies to enjoy the same tax breaks that will be granted to the subcontractors and affiliated companies of the oil majors operating offshore Guyana.
Secondly, the document makes no demand for oil companies and their subcontractors to increase their use of local labour and services over time
And thirdly, foreign companies will not be mandated to partner with local firms, despite a report from the United Nations Development Programme (UNDP) calling for same.
In fact, the draft policy states, “…it is the policy of the Government of Guyana to not mandate local-foreign joint ventures as a requirement for market access in the upstream petroleum sector, but instead to encourage such alliances…”
With respect to tax breaks, oil companies, their affiliated firms, and all their subcontractors enjoy a range of tax exemptions. They are not required to pay Value Added Tax (VAT) or import duties on equipment and supplies.
In fact, the only tax that being subjected to foreign subcontractors would be Excise Tax on fuel imports at a rate of 10 per cent. Meanwhile, locals have to pay 50 per cent.