TWO important bills were tabled in the National Assembly on Thursday last. The two bills are  the New Natural Resource Fund Bill and the Local Content Bill which, when taken together, will, in addition to greater transparency and accountability, allow for Guyanese to get a bigger share of the proceeds from the oil and gas sector.

In the case of the new NRF legislation, the bill seeks to ensure that revenues earned from the petroleum industry could only be used to finance national development projects and/or respond to natural disasters. It will be recalled that the NRF Act was hastily put together by the previous APNU+AFC administration even though its mandate in government was expired following its defeat in a no-confidence vote in December 2018. The newly proposed law is an attempt by the PPP/C administration to correct a number of deficiencies from the current legislation which, among other deficiencies, gave too much power to the Minister of Finance, who is given the final say on how the oil revenues are to be spent and the amount of money that could be withdrawn.

The proposed legislation, except in the case of emergencies, have specific ceilings and can only be withdrawn from the Fund unless there is parliamentary approval. The legislation when becomes operational will enable the government to make a 100 per cent withdrawal from the Fund which now stands at US$534 million. All other withdrawals will be progressively capped reaching a minimum withdrawal of three per cent of any amounts in excess of $2.5 billion.

There is no question that the current legislation has a number of loopholes which stands in the way of full accountability and transparency. This observation was made by the Inter-American Development Bank (IDB) which said that the design of the 2019 NRF Act departs from good practices and that its complexity may conspire against fiscal transparency and public understanding.

The current PPP/C administration, on taking office in August last year, made a commitment to correct the deficiencies of the NRF Act as a prior condition for any withdrawal from the Fund. This commitment was fully honoured and no such withdrawals were made. Moreover, in keeping with the norms of financial accountability and transparency, the bill makes it mandatory for all withdrawals from the Fund to be  first be deposited in the country’s Consolidated Fund out of which spending can take place and such spending must be part of the country’s annual budget estimates.

These are indeed forward looking measures on the part of the PPP/C administration. In the case of the Local Content Bill, one key element is the establishment of a Local Content Secretariat which shall consist of a Director and other members appointed by the Minister of Natural Resources.

The functions of the Secretariat will be to develop and maintain mechanisms for effective implementation of local content by contractors, sub-contractors and licencees; develop and implement strategies that will give preference or ensure equal treatment of Guyanese nationals and companies, conduct market analysis and make recommendations to the minister.

The functions of the Secretariat are wide-ranging but with one objective in mind, namely that locals are given a fair chance to benefit from our petroleum resources. There is a fair measure of anxiety if not skepticism that foreign companies with greater access to technology and capacity could benefit disproportionately from the opportunities generated by the petroleum industry. And while there could be some basis for such apprehensions, it is precisely for that reason the PPP/C administration has brought to the National Assembly the Local Content Bill which, when signed into law by President Ali, would seek to level the playing field, and wherever applicable, give local suppliers of goods and services a competitive advantage.

For example, the bill stipulates that 75 per cent of oil companies’ food must be procured from local suppliers. This will be a great boost to members of the farming community. Guyana with its rich agricultural land and resourceful farmers has the potential to meet almost the entire food needs of the country and for that matter the region as a whole.

The bill listed 40 services that oil companies and sub-contractors must procure from Guyanese companies and nationals by the end of 2022. Among these are office space rental, janitorial services, laundry and catering services.

These bills are still to be debated in the National Assembly but their anticipated passage will create new opportunities for local suppliers to cash in on oil revenues in ways not otherwise possible. The benefits of the two pieces of legislation are that it will allow for more money to circulate in the local economy which, in turn, will have an accelerator effect on the economy as a whole.

President Dr. Mohamed Irfaan Ali has repeatedly stressed the importance for local content in all investments in the country. ‘The type of investment we want must include locals, it must have a local content component. We encouraged them to partner with local businesses… because what we have seen from the interest in Guyana, if they get the opportunity, they would suck up the market overnight,’ the President cautioned.

It is exactly that concern of the President and other members of the local business community that the Local Content Bill is intended to safeguard against. In that regard, it has a nationalistic flavour which puts the interests of Guyanese ahead of other investors.

Given the historic and fundamental nature of the two bills, one can only hope that it will get easy passage in the National Assembly when it comes up for debate.