By Kiana Wilburg
When the oil and gas industry was under his purview, getting a Local Content Policy in place was priority for Minister of Natural Resources, Raphael Trotman.
During a recent appearance on Kaieteur Radio’s Programme, Guyana’s Oil and You, Trotman said that it was due to this strong intention that Trinidadian Local Content Expert, Anthony Paul was contracted.
Prior to handing the reins of the sector over to the Ministry of the Presidency, Trotman said that Paul had already prepared two drafts on the policy while noting that the Trinidadian had developed strong communication ties with various stakeholders.
But when the Department of Energy came into being and took control of the local content efforts, the policy was not completed by Paul. Instead, a UK Local Content Consultant, Dr. Michael Warner, was chosen for the completion of the final policy. This newspaper would have exposed, on several occasions, Dr. Warner’s ties to ExxonMobil, as well as the fact that he has never independently produced a policy for any country.
While he does not want to second guess the decision to use Dr. Warner instead of Paul, Minister Trotman said he does believe that “…Guyana lost some rhythm in its step when Anthony Paul left” while adding that he would have liked to see him remain engaged.
He noted however that the government could have framed the local content matter better.
“I believe more work can be done…,” the Minister added.
REMOVING KEY PROVISIONS
When Paul had completed the second draft of Guyana’s Local Content Policy back in May 2018, several provisions were included to ensure preferential treatment of locals. According to Paul, those provisions were inserted, taking into account, some of the mistakes his country would have made on the issue of local content.
But when time came for the final draft to be completed, the coalition administration selected Dr. Michael Warner, who removed key provisions that put Guyanese first.
Kaieteur News was able to identify same, after comparing the second draft with the one that Dr. Warner did.
In Paul’s draft, a strong case was made for ensuring foreign suppliers partner with locals. The Trinidadian said that partnership is crucial in ensuring the transfer of knowledge and technology. The International Energy and Strategy Advisor called for minimum requirements to be set for ownership through equity participation in joint ventures.
But in the final draft that was done by Dr. Warner who has connections to ExxonMobil, foreign companies will not be mandated to partner with local firms. In fact, the draft policy states, “…it is the policy of the Government of Guyana to not mandate local-foreign joint ventures as a requirement for market access in the upstream petroleum sector, but instead to encourage such alliances…”
Further to this, in Paul’s second draft, the Trinidadian noted that there needs to be a level playing field when it comes to the payment of taxes, hence his recommendation that foreign suppliers should be made to pay their fair share. Paul went as far as to outline a mechanism by which Guyana could capture taxes from the foreign suppliers. He said that the foreign companies doing business as agents, contractors, or sub-contractors to operators should be required to register a local company and pay taxes in Guyana.
In Guyana’s third draft, however, Dr. Warner removed this provision. In fact, not a single suggestion was made for locals to get the same tax breaks as the foreign suppliers so that they can have a fair shot at being competitive.
In addition to removing provisions that level the playing field for tax payments, Dr. Warner went a step further by proposing that the local content plans of foreign companies be protected by confidentiality provisions.
Dr. Warner specifically stated that the Business Minister shall only disclose to the general public, whether or not operators have submitted yearly Local Content Plans and half-year and end-year Local Content Reports. Other than that, the Business Minister must keep the contents of plans under wraps.
In Paul’s second draft however, no such call was made.
In fact, the Trinidadian’s draft policy is the only one that is in conformity with a report from the United Nations Development Programme (UNDP) which called for tax breaks for local companies and joint ventures between locals and foreign suppliers, among other things.
Dr. Warner’s draft policy is essentially, in complete defiance of the UNDP’s recommendations.
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