…but tasked with completion of policy for sector
By Kiana Wilburg
The completion of the Local Content Policy is now up to Business Minister Dominic Gaskin. This crucial document will provide guidance on the employment of locals as well as the use of goods and services provided by indigenous companies.
But there are concerns regarding the Minister’s ability to handle such a central matter when he appears to be clueless on a few basic, related issues. For example, the Business Minister has not seen, much less reviewed, the local content proposals of ExxonMobil and its subcontractors. Yet, he is tasked with completing the policy that will guide the entire sector.
The Minister’s lack of knowledge on the matter was revealed on a televised programme, Plain Talk, which was hosted last Wednesday by Chartered Accountant and anticorruption advocate, Chris Ram.
Ram explained to Gaskin that the law stipulates that oil companies, in their application for a production licence, must set out their plan to employ locals and use native goods and services.
On this premise, Gaskin was challenged to say if he was satisfied with the proposals of these contractors (ExxonMobil and its subcontractors Hess, Esso and China National Offshore Oil Corporation) in terms of employment targets and the procurement of goods and services.
To Ram’s surprise, Gaskin, who is a member of Cabinet and part of the special quintet assigned to overlook the oil and gas industry, is yet to lay his eyes on the proposals of those companies.
The Business Minister said, “Well let me be frank, I have not reviewed the proposals from the contractors. I know that there are stipulations or regulations in the Petroleum Act on local content as well as provisions in the Production Sharing Agreement (PSA)…”
Gaskin noted, nonetheless, that there is a need for “something stronger; something that addresses more specifically, how we intend to implement a Local Content Policy and what are the specific targets we would like to set in terms of employment requirements, procurement requirements, and technology transfer.”
He said that “all of these things need to be, perhaps, consolidated into one local government policy and perhaps, backed up with maybe separate regulations.”
While Gaskin has not seen the Local Content Proposals of the oil companies operating in the Stabroek block, Ram asked if he was satisfied with what he is seeing so far.
The Minister’s assertion was that it may be too early for him to pronounce on whether the local content efforts of the ExxonMobil consortium are enough.
“We haven’t seen a lot so far because, to be fair, we haven’t started production as yet. So a lot of what is envisaged has not had a chance to kick in. I won’t say that I am not satisfied. I don’t think it works like that. I think that as a government and as a people, we have to come up with a framework that is suitable to our own situation.”
Gaskin went on to explain that this framework has to be in the context of what is available locally in terms of skill sets and services. He stressed that the oil industry is new to the nation; hence, many of the requirements of the contractors at this stage would not be fulfilled by locals.
He said, “In many areas we don’t meet the requirements of the contractors and especially at this stage in the development phase of the project, all the laying of subsea infrastructure, we don’t have that sort of expertise, and that is where the really big contracts are going.”
The Minister continued, “And that is why I think that it is important that we have something that is legally binding in place that caters for building local capacity, and then we can set minimum levels for local employment or procurement of goods and services.”
Gaskin added, “We have to be aware, too, that we are a small population, and if we discover more oil and we have more operators out there developing, exploring and producing, do we necessarily have the local expertise sufficient enough to want to demand high levels of employment and management and procurement… if we demand high levels in this area what we going to do with other industries?”
ExxonMobil has often said that it takes local content “seriously”. But many critics question how important such an issue is to this multibillion-dollar entity when it is unable to name the 309 companies it claims to have utilized last year.
It was early last month that the entity was challenged by Chairman of the Guyana Oil and Gas Energy Chamber (GOGEC), Manniram Prashad to provide the evidence to support its claims.
Prashad told Kaieteur News, “If these figures are accurate then we would obviously be happy about it… but 309 Guyanese-owned suppliers? That is just concerning when there is no evidence provided at the same time to support it. Hence, we would like the evidence of this. We would like to have a list of the companies and the services they provided and when.”
This information was not provided last month when ExxonMobil’s Public and Government Affairs Advisor, Kimberly Brasington delivered a presentation on the work being done by her company thus far.
When questioned by this newspaper recently, Brasington still failed to provide the names.
Instead, the Government Affairs Advisor said, “This should be a good news story not a controversial one. ExxonMobil Guyana, on behalf of all our contractors, was excited to share some of the project’s local content numbers and thought Guyanese would be proud. We take building local content seriously and have demonstrated that through action and capacity building. We want Guyanese suppliers, businesses and individuals to be a part of the industry.”
Guyana’s draft Local Content Policy has also been criticized in recent months for lacking provisions, which would safeguard against exploitation by companies. The draft is still receiving “finishing touches” according to Natural Resources Minister, Raphael Trotman.
Be that as it may, 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 don’t 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.”
The Policy also states that Guyanese will participate in a manner that gives preferred access and opportunities to improve and enhance the country’s capabilities so that it can become internationally competitive and in the end, the country will progressively provide a greater amount of future services.
Capacity development, to enable more value retention, will be treated as an investment, rather than a cost, the policy outlines.
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