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Huge wage disparity allowing foreign companies to cheat Local content provisions – Chris Ram
Attorney-at-Law, Christopher Ram
Kaieteur News – The Local Content Act of 2021 was passed to increase the benefits of Guyanese from the burgeoning petroleum sector, but with foreigners being paid salaries significantly greater than those being paid to locals, Attorney-at-Law, Christopher Ram pointed out that companies may be cheating the provisions.
Ram was a panelist on the Oil and Gas Governance Network’s (OGGN’s) ‘Oil Talk’ programme, aired on Kaieteur Radio (99.1/ 99.5 FM) on Thursday evening. The show, hosted by OGGN member, Charles Sugrim, also featured Local Content Specialist from Trinidad and Tobago (T&T) Anthony Paul.
In explaining the purpose of Local Content, Ram explained, “It’s really (about) how much of the expenditure out of oil revenue or how much of the oil revenue accrues to Guyanese, human and material resources. In other words, do we really share in the pie?”
The Lawyer pointed out that Guyana’s legislation made provision for local content since 1986. Be that as it may, Ram said governments, past and present, seem ignorant of this. He argued that the politicians, in addition to a bad contract also allowed foreigners to penetrate the local content provisions.
Ram said, “If we really had local content would we have had the strain on foreign exchange? Petroleum is all an exchange earner and yet our country, we struggle so I think in a practical way, we have a challenge. We’ve never implemented local content.”
The Chartered Accountant observed that Guyana has not been paying attention to statistics regarding local content. He however pointed out that the wages earned by Guyanese should be compared to wages earned by foreigners.
T&T Local Content Strategist, Anthony Paul
Ram suggested that the disparity in wages could only be addressed by changing the 2016 Production Sharing Agreement (PSA). He said, “We can only stop it if we renegotiate the contract in terms of local content (and) we deal not only with head count and quantity but we deal with (the) sum of money.”
He continued, “So you don’t just say well oh you must employ 90% locals but if the 90% only get 10% of the revenue, it means the 10% expats get 90% of the revenue. That’s what we have got to fix.”
Meanwhile, Paul pointed to the importance of an ‘Equal Opportunity’ legislation. He explained this would ensure that if two people are creating the same value, they would be compensated equally.
The Local Content Strategist noted, “The expatriates get not only higher salaries, but they get housing, they get schooling for their children, they get paid vacations, all of which we pay for from cost recovery so we pay them more and we fret when they want to pay our own people more and there’s this thing they put around that if they pay the locals more, it will distort the local economy.”
He said that Trinidad and Tobago is known for its long history of oil production but the fact is that only 3% of the labour force is citizens of the country.
ExxonMobil Guyana Limited (EMGL), the operator of the Stabroek Block in its 2023 Annual Report stated that over 6,200 Guyanese are employed in the industry to support its operations.
Meanwhile, the Ministry of Natural Resources Local Content Secretariat in August revealed that local companies earned a total of US$314 million from the oil and gas sector within the first six months of 2024.
Martin Pertab, Director of the Secretariat noted, “As of June 30, 2024 expenditure among the related sector is somewhere around US$314 million of 54% of the 2024 projected estimate, when compared to mid-year of 2023, we are seeing growth in some areas such as engineering machine services by 238%, we have seen growth in accommodation services by 39%, we have seen growth in equipment rental by 48.5% and catering by 18.8%.”
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