Jan 09, 2022 Consumer Concerns
By Pat Dial
Kaieteur News – The advent of Oil and Gas Industries in developing countries has always been accompanied by positive and negative impacts. The main positive impact is that those societies for the first time in their history would have earned quantities of wealth never before imagined. The negatives are many – the new wealth is squandered in aimless consumption and the economic base of the country is neglected. When the oil reserves are exhausted, the country is again afflicted with poverty. Or, the new oil wealth engenders corruption among government personnel including politicians. Or, it could fuel inflation bringing hardship to the citizenry. Or, the oil companies could unfairly exploit the country. If however, a country has the will it could limit and eliminate these negative impacts.
One of the most important of such negatives is the characteristic of oil companies and their subcontractors to use only foreign goods and services and a foreign workforce, thus depriving Guyanese of involvement in the industry and a source of income. The State, rather belatedly, has taken measures to ensure that the oil companies engage Guyanese workers and source goods and services locally by the Local Content Act. All the political parties are agreed on this goal though they differ in methodology. The fundamental reason for this difference is that they are being inspired by different models.
Lawmakers in Guyana are aware that Local Content legislation is something new to the Guyanese experience and so have thoroughly studied the laws and experience of a large number of jurisdictions and have engaged foreign expertise to advise on the formulation of the Local Content Law. But since there could be no absolute certainty with the full efficacy of any model, the Law makes provision for easy amendments and for the participation of all stakeholders including the political Opposition.
A Local Content Secretariat has been established with responsibility for two Registers. The first Register will cater for individuals seeking employment in the Oil and Gas Industry and the second will detail businesses interested in providing goods and services for the sector.
Excerpts from the Master and Annual plans of the oil companies will be made and these will guide young people who may wish to make careers in the industry, as well as Guyanese companies, to gear themselves to meet the goods and services requirements of the companies. These Registers and Excerpts will be placed on the website of the Ministry of Natural Resources.
The Law reserves just over 40 activities of the Industry where there must be Guyanese participation ranging from 100 percent downwards. Such activities will include rentals of accommodation, legal services, insurances, accounting, procurement of food supplies, the hiring of tradesmen such as welders, masons, carpenters and so on. Guyanese companies would be able to link up with foreign companies so as to access technology which is not available in Guyana. The Law also prevents foreign companies from trying to pass themselves as locals. Employment in the industry is reserved for Guyanese citizens and their offsprings and this allows Guyanese in the diaspora to participate in the industry.
Though it is well known that the oil companies would prefer to employ whom they wish and source goods and services from foreign suppliers, the Local Content Law inhibits this and the companies know they will have to act within the parametres of the Law.
The recent remarks by Mr. Alistair Routledge, President of ExxonMobil Guyana, show that the positions of the oil companies and Guyana now coincide. “I am a firm believer – as is the position of ExxonMobil – that Guyanese should not only benefit from revenues which come from oil and gas, but should play an active role in the development of the resource as well. As the company advances its operations and explores new projects, it views the involvement of the Guyanese workforce and suppliers of goods and services as crucial”.
Mr. Routledge then gave a word of advice to Guyanese: “Local suppliers need to enhance their skills and capacity by forming small partnerships with foreign companies which will transfer critical skills and technology… This needs to be a win-win dynamic for local and international companies. International companies need to feel welcome and be able to generate some value for their investment in technology and knowledge transfer . . . Just as other countries with large or growing energy sectors, Guyana will need stable rules that facilitate large scale investments and set priorities and outline achievable targets for the industry”.
Guyanese should seize with alacrity the opportunities rolled out by the Local Content Law since the companies are beginning to recruit workers and procuring goods and services in an increasing crescendo. If anyone finds difficulty with the computer and website, he/she could approach the Ministry of Natural Resources for help.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)
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