Part 79
Introduction
The word is now out that long before the earlier planned date of First Oil, Guyana will witness the historic pouring of the first barrel of crude oil catapulting the small country of barely three-quarter million persons onto the world’s petroleum stage. Among Guyanese, there are those who are exuberant at the development while others cannot help but wonder whether instead of realising our dream, we are soon to be afflicted by the resource curse, whether the event taking place in the absence of a functioning Parliament is an omen like the Ancient Mariner’s.
Let us put that off and get back to more mundane matters like Local Content which has become the new buzzword. In fact, it is so important that after three attempts over more than two and a half years, the Government still cannot get it right. The Government has sought to address the matter by commissioning a Local Content Policy and has published three drafts, the First of which was dated April 2017, the second in May 2018 and the Third in May 2019. The most recent was itself only partially complete with numerous instances of the words to be confirmed or the initials tbc.
In an act of pointed irony, clearly the foreigner recruited by the Granger Administration to make the case for local content did not seek the help of a local counterpart who would have told him that there is no such thing as a GRA definition “Guyanese-Owned, Registered in Guyana” and “CARICOM-Owned, Registered in Guyana”. That is the least of my concerns about this Draft. Maybe like so many others, he did not take the time or make the effort to read the Petroleum Exploration and Production Act or the Regulations made thereunder.
What local content is
That in my view has to be the starting point with the end point being the legislative changes which would have to be made even if only to repeal the existing provisions should the Government decide not to have local content as a statutory requirement. This column has pointed out ad nauseam the provisions of the Act and Regulations regarding local content. Section 36 of the Petroleum and Production Act prohibits the granting of a production licence to an applicant unless the proposal for the employment and training of citizens of Guyana and with respect to the procurement of goods and services obtainable within Guyana are both satisfactory. This prohibition is extended to an application for a petroleum prospecting licence as well.
So what does the most recent draft state? It is of course a reasonably long document – thirty-six pages – so this column deals only with a few issues raised in the Draft. To start with, “Local Content” is defined to mean the active participation and development of Guyanese labour and suppliers in the petroleum sector and the benefits that arise from expenditure in the sector on labour, goods and services for Guyanese industry, the economy and wider society.
Local content in relation to goods and services is divided inclusively and exclusively into two groups – Group A and Group B. Group A means categories of goods and services where evidence shows the presence of one or more Guyanese Suppliers with the required capability, capacity and competitiveness sufficient to be invited to provide and expression of interest or otherwise engage in a tender process, either directly, as a partner or sub-contractor to another supplier.
Contrastingly, Group B means categories of goods and services where evidence shows an absence of any Guyanese Suppliers with the required capability, capacity or competitiveness sufficient to be invited to provide and expression of interest or otherwise to engage in a tender process, or where the Operator or its Primary Contractors can justify single or sole sourcing for reasons fully consistent with good industry practice.
The Policy also envisages a label carrying a certificate “Certified Made-in-Guyana” which means a specified material, product or equipment that has been issued with a certificate by the [name of Guyana certifying agency] stating that the good meets requirements of domestic value addition to be classed as ‘Made-in-Guyana’.
For the purposes of preference for the Employment and Training of Guyanese, a “Guyanese Person” or “Guyanese Citizen” or “Guyanese” means a person or persons who have Guyanese Citizenship under the Constitution of the Co-Operative Republic of Guyana Act, Chapter 1:01, 1980, which includes inter alia a person born in Guyana (Article 43) and a person born outside Guyana who is a child of a parent with Guyanese Citizenship (Article 44).
First Consideration
To maximise the benefits of the petroleum sector for local employment and local businesses, investors, Operators and their Primary Contractors are expected to conduct their affairs and operations in Guyana in a manner that gives Guyanese persons and Guyanese Suppliers fair and adequate opportunity and first consideration where capable and competitive to provide labour, goods and services and improve and enhance their capabilities.
The essence of the Policy can be summarised in two words: First Consideration. The Draft, in perhaps its most definitive pronouncement, requires Operators and their contractors, in making decisions concerning recruitment and procurement to execute petroleum activities, to give first consideration to Guyanese persons having appropriate qualifications and experience, and to Guyanese Suppliers where capable and competitive.
The Draft contains an elaborate system of record-keeping and reporting under the watchful eyes of the Ministry while using a series of matrices.
To be continued.
