– less than ten respond to draft sent out by Govt., says Gaskin
Despite the “raging discussions” in the media about the absence of a Local Content Policy, Business Minister, Dominic Gaskin appears to be getting “different signals” from some quarters.
The Minister revealed yesterday that his Ministry sent the second draft of the Local Content Policy to 40 organisations. Gaskin said that he received less than 10 acknowledgements of receipt. He said, too, that only two organisations responded with recommendations for changes.
The Business Minister made this known during his presentation at the opening ceremony of the laydown yard that was leased by Mohamed Enterprise to Falcon Logistics. The laydown yard is located at Area MM Mcdoom. It will become a holding facility for pipes and other important equipment to be used by ExxonMobil.
There, Gaskin said that the Georgetown Chamber of Commerce and Industry (GCCI) is one of the two entities which submitted comments on the policy. He revealed that the Chamber is slated to make a presentation before his Ministry quite soon.
Gaskin stressed that a constructive discussion is yet to take place on the local content policy. Gaskin said this is needed before finalizing the document.
The Business Minister added, “We can never get 100 percent local content but we can all agree that we need to get capacity. We lack the skills and expertise required by the sector. Three years is a short time to develop those skills and we need to improve safety standards and management systems, especially where those are required by companies in the sector. We also need training in various areas and this cannot happen overnight…”
GUYANA STILL WAITS
Since the discovery of oil and gas in 2015, there has been considerable talk about how Guyanese will fit into the supply chain. A Local Content Policy was supposed to guide this process. But years later, the country remains without a finalized version of this crucial document.
Pointing this out recently was Chartered Accountant and Oil and Gas Academic, Christopher Ram.
He said, “Three years after the famous discovery announcement, the Granger Administration has failed to ensure the local content requirements established by law or to pass a single piece of legislation pertaining to petroleum operations directly, or indirectly with respect to the environment, labour or other rights. Or to formulate a depletion policy, consider alternatives to the production sharing agreement or address its mind to a national refinery given the new and increasing volume of proven reserves.”
He also questioned what possible excuse the President and his Government by extension could have for its failure to address this matter, which is a sense of urgency.
As stakeholders in the oil and gas industry eagerly await consultations on the second draft of Guyana’s Local Content Policy, Chatham House Advisors, Anthony Paul and Renee Roger Tissot have highlighted that there are some common pitfalls, which should be avoided.
In a most comprehensive research paper, the local content experts cited poorly defined or inconsistent terminology as a major hindrance to the success of local content implementation. In this regard, they said it is imperative that governments have consistent definitions of the terms: local content, local company or supplier, and nationals/locals. The experts said that these terms often have different meanings in trade agreements, treaties and in government procurement legislation. They said that definition is critical to target setting, measurement and performance management.
Tissot and Paul also noted that the lack of strategic direction is one of the most obvious pitfalls. In this regard, the Local Content Experts explained that policies that fail to consider long-term objectives in regard to industrialization, economic diversification and strengthening of value creation may focus on the easy ‘low hanging fruits’ of local content activities and miss out on opportunities to create in-country value.
The Experts noted that priority is sometimes given to low value added activities with limited capabilities for transfer into other sectors. They said that these opportunities often cause short-term local economic booms that tend to be more disruptive to the local population in terms of a surge of consumption and localized inflation, and create community resentment toward those employed in the temporary oil activities.
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