Some Local Content talk sounds like rent seeking
Kaieteur News – The ongoing debate – skilfully highlighted by your newspaper – about local content suggests that it is a complex issue that must balance the legitimate demands of the local private sector to directly benefit from the oil industry with its capacity to provide the economic skills and resources to help in optimizing government oil revenues.
First, I was drawn to comments made by GCCI executive Timothy Tucker, quoted in Kaieteur News as saying, “We have to realize we don’t have the ability to do everything, but it doesn’t say I can’t come find a partner for him to undertake the most difficult or most lucrative contract to deliver a service in the sector. I can safely say that there is no way I can dive underwater with remotely operated equipment and deep water fabrication or anything like that, but maybe I can put together a good proposal and give it to the Government or I can find to a partner … ”
This sounds a lot like rent seeking: That is, Tucker and others in the private sector may not contribute any actual skills or even resources to a joint venture for underwater diving. Their only “asset” in any joint venture would be their Guyanese company interest. This may explain the pressure for legislation that will make “being a Guyanese” something of great economic value.
I also note comments from the Director of the Local Business Development Center, Natasha Gaskin Peters, who said that when the oil companies spend to buy goods from a local company “if they import them, that doesn’t really include local.” In fact, that’s basic trading and just “getting cut” for being a local company. And that could also mean higher costs for the operator and therefore less revenue for the government.
Again, the bigger issue remains: there is a real danger – in fact, it is already happening – that many other sectors will lose workers and economic resources in the private sector’s blinkered rush to profit from oil. It is the exact opposite of what President Ali envisions for a diverse and resilient economy. That’s why the call for a full understanding of the country’s workforce and projections of what the industry will need for the next five to 10 years is so vital.