Local Content Policy before year-end
Oil and Gas Adviser Matthew Wilks and Director of the Department of Energy, Dr. Mark Bynoe
Delano Williams’ Photo
Oil and Gas Adviser Matthew Wilks and Director of the Department of Energy, Dr. Mark Bynoe Delano Williams’ Photo

…consultant being recruited to finalise document

DIRECTOR of the Department of Energy Dr. Mark Bynoe said Guyana’s Local Content Policy will be in place long before the country starts producing oil in 2020.

The absence of a Local Content Policy remains a concern, primarily for the private sector and Thursday when he held his maiden press conference as Director of the Department of Energy, Dr. Bynoe assured reporters that steps are being taken to finalise the document.
“The department after consultation with the private sector is in the process of recruiting an individual consultant to finalise the draft local content document,” he told reporters at the Ministry of the Presidency.

The policy document, when adopted by the National Assembly, would outline the framework on which local content will be understood, developed, measured and secured. The Energy Department Director said the private sector is satisfied that sufficient consultations have been conducted on the draft Local Content Policy and is anxious to have the process move forward.

It is hoped that the draft policy, which is in its second phase, would be finalised at the end of the year. That document would be submitted to the National Assembly in the form of a White Paper for approval by the House.

Grilled on whether the policy document would be in place before the production of oil by U.S. oil giant ExxonMobil, Dr. Bynoe responded in the positive.

“Where I sit and where my colleagues sit, we are confident that there will be a Local Content Policy long before first-oil,” he said. Noting that issues pertaining to joint ventures would be addressed in the policy document, Dr. Bynoe said his department is cognisant of the fact that already there are existing joint ventures; as such, the framework will be designed to capture the benefits accruing to Guyana in jobs and revenues derived through such joint ventures.

He said while the Department of Energy cannot avoid risks, it can aid in mitigating those risks within the budding oil-and-gas industry.

“Part of what we are seeking to encourage is substantial joint ventures. Those joint ventures therefore will help us therefore to spread those risks; it will also help with the said local firms to build capacity and will also help them to raise standards.

“So we want to focus, in terms of local content, not just in terms of establishing joint ventures for the oil-and-gas sector, but let’s look at it beyond that, that with or without oil and gas, if we are able to raise our standards you will become more competitive and more marketable outside of that sector,” Dr. Bynoe explained.

Local Content, in the context of Guyana, is the sum of inputs of local goods and services, including employment across the oil-and-gas value chain.
It is intended to ensure the education, inclusion, and advancement of as many as possible in the value chain of the oil-and-gas industry. In an effort to maximise benefits and retain value from Guyana’s petroleum resources, considerable focus will be placed on capacity development, local content and value-addition. Additionally, the policy framework is built on five themes: value maximisation, training and employment, supplier development, ownership and taxation.

The Georgetown Chamber of Commerce and Industry (GCCI) is among entities that have made submissions in this second round of consultation. GCCI has submitted to government what it calls a ‘Model Local Content Legislation.’

The model legislation, which was seen by the Chronicle, defines Guyanese companies as “Companies that are registered in Guyana where 51 per cent of the share capital are owned by citizen (s) of Guyana; where the board meetings of the said companies are held in Guyana; the head office of the company is located in Guyana and; 70 per cent of the workforce of the company follows suit with the definition of a citizen of Guyana as defined in the Guyana Citizenship Act of 1967.”

Part II, Section Three of the crafted GCCI Local Content Bill stipulates that an operator or contractor must ensure that first consideration is given to Guyanese companies in the provision of goods and/or services directly related to the petroleum industry.

“In the event that a Guyanese company is not selected to provide a good and or services, the burden of proof lies with the relevant party in the form of the operator or contractor to demonstrate why [the] Guyanese company has not been selected,” Section Four reads. It also includes provision for Human Capital Development and Monitoring and Accountability.
However, Director of the Department of Energy has advised against making the Local Content Policy too prescriptive. He said as the country moves closer to finalising the policy document, Guyanese must determine whether they have the capacity to take advantage of the Local Content Policy.

Dr. Bynoe was accompanied by the Energy Department’s Oil and Gas Adviser, Matthew Wilks.

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