“Strategic consultations” are being undertaken on a draft Local Content Policy
– Submissions have an extended deadline
Kaieteur News – Following the first opening of consultations on the draft local content policy at the Arthur Chung Convention Center (ACCC) in mid-February, the Ministry of Natural Resources (MNR) has revealed that it is conducting a series of “strategic stakeholder” consultations. develop the development of the document.
These strategic discussions began on March 3 and will end on March 19, 2021. During this extended period of discussions, the Ministry said comments are welcome on all issues covered under vision, mission and the policy objectives.
Kaieteur News understands that these strategic commitments focus primarily on the parameters, principles and pillars of the draft policy that the government needs to consider when defining participatory measures of Guyanese workers and companies, and on identifying capacity and exists. within the local markets to support the development of an oil and gas business in Guyana.
The Ministry said that the series of consultations will allow it to engage with public sector, private sector and civil society organizations involved in various sector and affiliate industries, with a particular focus on workforce improvement as education agencies ; manufacturing and fabrication services; business development and support; funding; audit and accounting; transportation, warehousing and land services; hospitality; housing and infrastructure; regional and international trade; and other economic sectors such as tourism, agriculture.
For those who haven’t read the more than 50-page document on the Ministry of Natural Resources website, Kaieteur News has compiled a list of some of the document’s key objectives and provisions aimed at getting Guyanese into a seat the driver of the oil and gas industry.
The draft document proposes an implementation policy, which will set out specific initiatives and measures to achieve each objective.
Importantly, the document proposes companies to meet some targets for local content. These will be progressive to reflect the changing state of the domestic supply base and demand going forward. It was noted that it will operate in a collaborative manner with stakeholders and will include regular reporting in a way that is easily accessible and understandable to all parties.
In terms of the targets, the policy proposes to ensure that there is a minimum growth rate over the years in Guyanese consumption in the fields of employment and the provision of contracts to local people for goods and services.
From the date of the license or petroleum agreement’s effectiveness, the draft document proposes that companies should have up to five to seven years to ensure supervisory staff, technical core staff, professional support staff, and semi-skilled and unskilled workers , more than 50 to 60 percent Guyanese and 10 years to get management staff at least 45 percent local. This is for upstream oil businesses such as those involved in exploration, drilling, and extraction of the petroleum resources.
Targets are also set for companies in the midstream and downstream aspects of the oil industry. Midstream companies are those involved in the wholesale transport, storage and marketing of raw or refined petroleum products. Downstream businesses are involved in converting oil and gas into finished products. These include refining crude oil into gasoline, natural gas liquids, diesel, and a variety of other energy sources.
The draft policy proposes that these companies have up to seven years to ensure that the employment of local people for their supervisory staff, technical core staff, professional support staff, and a semi-skilled and unskilled workforce exceeds 60 to 80 per cant. They have up to 10 years to go beyond that.
The draft policy also states that Guyanese must be given opportunities to provide services in the areas of:
1) Front-end Engineering Design (FEED)
2) Fabrication, Construction and Storage
3) Procurement of Materials
4) Research and development related to services in the country
5) Transportation, delivery and disposal services
6) Good drilling services
7) Health, safety and environment services
8) Information systems, information technology and communications services
9) Marine operations and logistics services
10) Financial and insurance activities.
For further benefit to Guyanese businesses, the draft policy recommends that contracts be unbundled to reflect state potential and local market growth; market conditioning, including early notification of planned activities; favorable treatment of local people; contract management with supplier performance improvement strategies.
It also recommends facilitating partnerships between Guyanese and international suppliers; provide contract terms that facilitate access to competitive finance; opportunities to learn and increase transparency and accountability for procurement decision making; measure and report on local content policy implementation and achievements; along with benchmarking, sharing of best practice and continuous improvement.
FUNDING FOR GUYANESE DELIVERY
Further to the above, the draft document suggests the availability of affordable and competitive funding for local people. It notes that several approaches have been used in different jurisdictions, including the provision of specially capitalized and managed funds and innovative contracting and borrowing mechanisms.
ALL FOREIGN AGENT / CONTRACTOR MUST PAY
The draft policy also proposes a key provision, which will see an increase in public revenue (royalties and taxes) generated from the oil and gas industry which the government can use to provide social infrastructure and services, to withstand volatility of commodity prices and / or saving in sovereign wealth money for intergenerational wealth transfer.
In this regard, he notes that local participation will allow the employment of more local people and more local profit-making companies, thus enhancing the country’s tax base. The document states, however, that only local people should be expected to pay their fair share of taxes. It clearly states that foreign suppliers have to pay up as well. To the extent that the local tax authority’s administrative effort is reasonable, the draft policy proposes that foreign companies doing business as agents, contractors, or subcontractors to operators in Guyana are required to register and / or obtain a local company licensing them. and paying taxes in Guyana.
REGULATION LAYERS
In implementing the above, the sector will be regulated through various tiers, starting with the Sector Regulator.
Under the legislation envisaged to give life to the Guyana Petroleum Commission (PCG), it is proposed that this body be the Regulator to ensure that reports are submitted to Parliament and to mandate that oil companies and their contractors managing their procurement. through local content policies and strategies that align with national policy.
It is envisaged that the PCG will undertake these tasks through a dedicated Secretariat or Local Content Unit, which will be responsible for implementing this Policy and the relevant regulations.
The Local Content Unit will also measure and report on the performance of local content by Operators and Contractors, in a transparent and consistent way.
The government, according to this newspaper, intends for the Local Involvement Unit to be overseen by the “Interagency Co-ordinating Committee,” made up of senior officials of different ministries and government agencies for which the Minister will be responsible to oversee the implementation of this Local Content Policy. It is also expected to identify those goods and services to be reserved for Guyanese and set targets for local content and participate in the provision and periodic review of key goods and services.
A “Multi-stakeholder Working Group on Local Content” will also be set up and chaired by the Government, comprising representatives of key stakeholder groups, including Chief Executives, multinational service companies, the local private sector including the financial sector, education and training establishments. , non-governmental organizations, labor and civil society. The Working Group is expected to advise the Interagency Co-ordinating Committee and support co-operation and co-ordination among and between stakeholder groups and allow early action on essential items required for the implementation of the Local Content Policy.