In order to prove to the Government of Ghana that it is using local products and services to a significant degree, U.S. oil giant, ExxonMobil agreed to submit reports on all tendered contracts.
But Guyana’s Government would not benefit from this kind of information, since the deal it signed with Exxon is dissimilar on this front. In fact, ExxonMobil has no specific procurement or purchasing guidelines in the contract it has with Guyana.
In the African State of Ghana, however, the situation is quite different. Exxon Mobil agreed that following consultation with the Petroleum Commission, it would submit an annual Local Content Plan. That plan would include the engagement and utilization of Ghanaian subcontractors for the provision of goods and services, and the employment and development of qualified Ghanaian citizens.
Both parties agreed that the capacity of local suppliers in the Ghanaian market will be assessed periodically by a qualified international third party and the results of the assessment will be presented to the Petroleum Commission as part of the Local Content Plan of the operator.
Furthermore, ExxonMobil is also expected to require its Subcontractors to acquire materials, equipment, machinery, and consumer goods produced or provided in Ghana by an Indigenous Ghanaian Company which are: (1) equivalent in terms of quality, quantity, availability, delivery, safety, and other commercial terms as foreign materials, equipment, machinery, and consumer goods; and (2) available for sale at prices which are no more than 10 percent higher than the imported items, including transportation and insurance costs and customs charges due.
Its subcontractors are also required to contract local services provided by an Indigenous Ghanaian Company to the extent to which: (1) the services they provide are equivalent in terms of quality, availability, safety, and other commercial terms as those available from foreign contractors; and (2) their prices, when subject to the same tax charges, are no more than 10 percent higher than the prices charged by foreign contractors for similar services.
When ExxonMobil is finished with that, it must submit to Ghana’s Petroleum Commission, a report on the services it contracted on a quarterly basis.
Guyana’s local content provisions have come in for scathing criticisms, since there are no strict reporting requirements as mentioned above, nor is there any requirement for Exxon Mobil to use to the maximum extent, local goods and services.
With this mind, the call for strong local content policy and legislation has been increasing. But even this is still far from complete.
The current Local Content Policy is still receiving the finishing touches. The draft speaks nothing of how to avoid procurement fraud, conflict of interest and favouritism, among other crucial areas.
Instead, the Local Content Policy framework 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.
The Policy articulates that this will be done through; training, development and employment initiatives (Capacity Development), ensuring availability of ownership participation for qualified Guyanese equity interest (Ownership Value), supplier development provisions for goods and services by locals to support sector operations (Local Content); and well-tailored social contributions for greater impact and benefits (Societal Benefits).
It also describes what will be done to ensure that the activities in the petroleum sector are conducted in a manner that transparently secures the maximum benefit for the people of Guyana, while recognizing the limitations of the country and holding all actors accountable to the present and future generations of Guyanese who are the owners of the nation’s petroleum resources.
Additionally, the draft policy recognizes that the petroleum resources of Guyana belong to all its citizens, and represent an asset of significant intrinsic value which, once removed, diminishes the wealth of the nation, unless there is transformation in value from resources below the ground to improved quality of life above it for current and future generations of Guyanese.
The draft says, “Guyana will approach the development of its petroleum resources, people and businesses in a pragmatic, transparent and accountable manner. This will be conditioned by existing circumstances and an analytical approach to understanding the resource, the activities it engenders and our input capabilities. We shall pursue strategic opportunities for local capacity development and participation that give us the maximum possible benefit now and in the future.”
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