STUDIES have shown that in other oil-producing countries, if the local content policy is enshrined within its legislative framework, then it would not work effectively. And, it is the task and/or responsibility of the government to ensure that it is in place and not just merely a policy promoting local content.
The current draft local content policy framework mirrors an academic paper–albeit inadequate – rather than a pragmatic policy paper. To this end, while the draft policy recognises in generic terms– the objective of local content strategies –it does not speak to the specificities with respect to how it intends to execute local content activities and/or strategies.
For example, it highlighted that there will be a regulatory mechanism but it did not address the workings and functionalities of that mechanism. And it does not speak to a strategy of removing barriers (if any) for local firms’ participation, and what strategies will be undertaken for enhancing the contestability of local firms’ and Guyanese nationals’ participation as against international firms and foreign nationals.

Moreover, it is noted also, that the draft petroleum commission bill merely speaks to the promotion of local content and local participation in petroleum activities which is unarguably inadequate; unless there will be a separate legislation to address local content.

So what obtains in other countries, for example Malaysia? According to Nordas et.al, (2003), the objective of Malaysia’s LCPs is to: (1) provide affordable petroleum resources to the local market; (2) build the foundation for forward links; and (3) secure local involvement and control of both upstream and downstream segments.
A mix of regulations, incentives-based and capability-building programmes, are used to achieve the abovementioned objectives. The main ‘vehicle’ for the Malaysian LCPs was through Petronas (Oil & Gas Company) inter alia – its participation in PSAs and its policies focusing on developing the local work force technical skills and efficiency of their supply industry.
Under the PSA terms, contractors are required to: minimise the employment of foreign workforce – to this end, the recruitment of foreign personnel requires the approval of Petronas; train internal Malay personnel – this includes the provision of capability development programs that enable Malay personnel to replace the expatriate workforce; commit a minimum monetary amount to be allocated to the training of Petronas personnel, the amount being contract specific; and offer on-the-job training to personnel of the NOC, upon the request of Petronas.

Also, every PS contractor is subject to an annual research contribution equivalent to 0.5 per cent of the sum of cost oil and contractor’s share of profit oil and the research contribution is tax deductible.

With the availability and accessibility of sufficient literature of lessons learned in hindsight – on poorly implemented and less effective LCPs in some African oil-producing countries such as Nigeria and Angola for example; it is now imperative that local content strategies be adjusted to address important questions about definition and measurement of local content and seeking balance between strong regulation and encouraging investment that secures the best possible outcome. It is the responsibility of host governments to link local content to governance, anti-corruption strategies and substantive transparency by all parties (Ovadia, 2015).

Development strategies that rely solely on productive investment of petroleum revenues have failed Africa in every case. Yet, local content offers new potential to make oil and gas work for African development in the 21st century. To this end, Ovadia (2015) argued that – with the right policies and involvement of all stakeholders, natural resources can be developmental.
Having benchmarked Guyana’s draft LCP to the LCPs of other established petroleum producing countries around the world, a number of inherent weaknesses have been identified. While the draft policy recognises in generic terms – the objective of local content strategies – it does not speak to the specificities with respect to how it intends to execute local content activities and/or strategies.

With regards to proposed recommendations, first and foremost, the local content strategies and policies need to be incorporated in the legislative framework. It is noted also, that the draft petroleum commission bill merely speaks to the promotion of local content and local participation in petroleum activities which is unarguably inadequate; unless there will be a separate legislation to address local content. As was evidenced in the local content around the world, without having it incorporated in the legislative framework, it is largely ineffective and much to the disadvantage of the host countries.

Henceforth, the first recommendation, for emphasis is the incorporation of the LCP into the petroleum legislation (s); clear targets, procurement rules and strict measurement procedures need to be identified and established; policy tools and/or instruments were not addressed as well hence this need to be worked out for example, what fiscal incentives would be put in place.