By Kiana Wilburg
Companies operating in Guyana’s extractive sector are required to give first preference to the country’s local goods and services before trying to acquire same overseas. They are also expected to make
contributions which will transform the lives of citizens. This is usually referred to as local content and it will be well documented in Guyana’s first report which has to be submitted to the Extractive Industries Transparency Initiative (EITI) next month.
The EITI represents a body of standards which informs the way the natural resources sector is governed. Overall, the standards dictate that the nation’s resources, such as oil, gas and minerals, should benefit all citizens.
Rached Maalej, who has been hired as the Independent Administrator to prepare Guyana’s first EITI report, said that a company putting advertisements in a newspaper, using taxi services or making purchases at the local markets would not be regarded as local content and therefore, would not be documented in Guyana’s first report.
Maalej, who also works with UK accounting and business advisory firm, BDO LLP, said, “The final objective of the report is for one to see how the people are benefitting from the extractive industries, for people to see how the money the government is earning from the sector is transforming their lives. In fact, the entire report is about that…”
The Tunisian continued, “So let me give you some examples of what I am talking about. When we have a tax regime; it allows for a barter arrangement. You give the company an exemption but you tell them that in exchange for this, you need to build us a bridge or you need to build us a school or something like that, that is local content. That goes into the report.”
The Independent Administrator added, “When we say that the companies need to publish their social expenditure to us, this means that they have to say what they did for the locals to transform their lives. Then they would say they gave x, y and z.
“This is local content and it has to be in the report. When you have an agreement with the company, it should say that it is required to hire locals and not bring all the foreigners or expatriates to take all the jobs…We will check for this because this is how you capture local content and it will be in the report.”
The EITI Analyst said, too, that during his review of local content in Guyana’s extractive sector, focus will be placed on companies’ training programmes to assess if they are passing on skills to the locals.
He said, “Now let’s say a company is given exemptions on imports, is there a system in place to ensure they are not importing things that are already made or available in Guyana? And if they are found importing items that are available here, are they made to pay the required taxes? This is one of the ways in which you capture local content and we will look at this…”
Maalej added, “So use of taxi service, stationery from a local story, ads in a newspaper will not be considered local content. We are looking at the tangible, transformative effect of the extractive sector on the lives of citizens…”
LOCAL CONTENT DEBATE
In the absence of a Local Content Policy, USA oil giant ExxonMobil, has been using its own definitions and terms to guide its reporting to the Coalition government on its use of local content.
In fact, it was in June last year that ExxonMobil provided the Government of Guyana with a list of companies that it used as part of its local content obligations. Bourda Market, Haags Bosch Dumpsite, Shanta’s Roti Shop were among some of the ‘companies’ listed. Even government agencies like the Guyana Power and Light and the Guyana Revenue Authority made the cut.
The list of “registered companies” was also padded with the names of 41 individuals; these include Dennis Charran, Mokesh Daby, Colin Daniels, Colvin Lockhart, Kembleton Clyne, Kurt Branker, Ramesh Seebarran, Ganesh Ajodha, Gary De Jesus, and Stan Gouveia.
It also duplicated the name of Ram and McRae, an accounting firm. It is listed as Ram & Mcrae and three spaces later in the document as Rams and McRae.
The issue is one which has stirred quite a debate in some circles as to what constitutes local content.
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