ONCE more Guyanese are trained to fill the capacity deficits within the burgeoning oil and gas sector, the local content legislation will be amended to ensure that oil companies operating in Guyana are legally required to hire an increased percentage of Guyanese to fill existing gaps.

This assurance was given by Vice-President Dr Bharrat Jagdeo during a breakfast hosted last week at State House for members of the Private Sector Commission (PSC).

“As we determine the competitive capacity of the country, that could be changed; the laws will be changed,” Dr Jagdeo affirmed.

He said that the People’s Progressive Party/Civic government will ensure that it partners with the private sector to accelerate and build capacity in areas where Guyanese may be lagging.

Of the 40 sub-sectors outlined in the Local Content Bill, oil companies are legally required by the end of 2022 to ensure that 100 per cent of their ground transportation needs are satisfied by Guyanese entities.

The same percentage applies to the provision of immigration support services, customs brokerage services, and visa and work permit services. Similarly, 90 per cent of services relating to the rental of office spaces, the provision of catering services, accommodation services, laundry and janitorial services, and legal services must be procured from local entities.

The minimum local content requirements contained in the legislation relate to engineering and machining, which secures only a meagre five per cent of opportunities for Guyanese workers in that field, followed by metrology and dredging services at 10 per cent and aviation and borehole testing services at 20 per cent.

However, once more and more Guyanese are trained in the latter-mentioned areas, the legislation could be amended to ensure that those persons are guaranteed increased employment opportunities. “Over the next year, we want to work with you to build capacity; there would be a massive training programme that… will radically change the environment for our local people,” Jagdeo noted.

The proposed legislation which was recently tabled by government in the National Assembly contains specific penalties for foreign companies that fail to adhere to tenets of local content.

More specifically, it proposes a penalty of GY$50 million for companies that fail to outsource most of their services to entities owned and run by Guyanese.

“The ball is in your court now to ensure that you make full use of this,” Dr. Jagdeo charged.

The former President was also keen on advising businessmen and women to ensure that along the road to prosperity, their voices are heard and that their concerns are taken into consideration.
“We’re not asking that you slavishly support what the government is doing, but that you yourself assess where things work in your favour and you ensure your voices are heard,” Dr Jagdeo emphasised.

TROJAN HORSES
He also encouraged the business community to be wary of the “naysayers [who] want to stop everything under the sun and many of them are sometimes Trojan horses,” Jagdeo said, alluding to a local Non-Governmental Organisation (NGO) that has been advocating against Guyana’s petroleum development.

“… NGOs that can’t succeed in their own countries to get policy-making through, but they want to keep the south constantly underdeveloped,” the Vice-President posited.

He went further to respond to the group’s climate-change arguments which suggest that Guyana should cease its oil operations owing to its impact on the environment, even as “their countries are busy pumping out greenhouse gases.”

“But, they believe that we’re the ones that have to save the world now, although our greenhouse gases are [just] a fraction of global emissions,” added Jagdeo, who has been globally recognised as a champion of the environment.

He told the PSC members that within the past 16 months, the PPP/C government had been focused on crafting and implementing the programmes and policies that would set the foundation for thriving private sector investments and raise the standard of living of all Guyanese across the length and breadth of the country.

Jagdeo noted that aside from the Local Content Policy, the future and advancement of the citizenry will be positively impacted by passage of the Natural Resources Fund (NRF) Act, which seeks to repeal the ‘inadequate’ NRF Act of 2019.

That legislation was hurriedly implemented by the former Coalition Government, even after it was toppled with the passage of a no-confidence motion in December 2018. The law in its current form has been heavily criticised by Guyana’s global financial partners, including the Inter-American Development Bank (IDB).

Financial experts at home and abroad had also complained that the existing Act, among other things, gave too much power to the Minister of Finance, who is afforded the final say on how oil revenues are spent and how much could be withdrawn.

ARM’S LENGTH
Jagdeo reminded attendees that under the newly proposed NRF law, the Finance Minister would be kept at arm’s length, and the private sector would be one of the parties who will have oversight of the fund, including how the oil revenues are spent.

As it is, Guyana’s NRF, which is lodged in a federal bank in the United States, contains an untouched U.S.$534 million, which is expected to see mammoth growth in the coming years.

The government in the new law is proposing that the oil monies only be used to finance developmental projects and/or respond to major natural disasters. Moreover, if the PPP/C government has its way, there will be specific ceilings attached to withdrawals, which could only be approved once there is parliamentary approval.

If the new law is passed, government, in the first instance, would be allowed to withdraw 100 per cent of the oil revenues, after which withdrawals would be capped at specific percentages.

The cap will take effect at 75 per cent of the second U.S.$500 million deposited into the NRF during the preceding fiscal year, followed by 50 per cent, then 25 per cent, five per cent, and finally, three per cent of any amounts in excess of $2.5 billion.

Those caps, Jagdeo reminded the audience, were instituted as a means of ensuring that all Guyanese are better equipped to calculate how their country’s oil earnings are being spent.

Further, it also stipulates a penalty of 10 years imprisonment for any Finance Minister who fails to disclose receipt of oil revenues within a three-month period. “Monies received have to be officially gazetted,” Jagdeo said, as he referenced a situation where the former A Partnership for National Unity + Alliance For Change (APNU+AFC) government failed to disclose and even denied receiving a signing bonus it had obtained from oil giant, ExxonMobil, in 2016.

Nonetheless, in briefing the PSC members on the critical amendments, Dr Jagdeo said that local businesses should not allow themselves to be guilt-tripped into supporting the policies that create positive conditions for Guyana’s growth.

He said that the PPP/C government has had a positive track record when it comes to private sector growth, not only since 2020, but also after it dethroned the People’s National Congress (PNC) administration.

“After decades of rule under [the] PNC, you had a situation where there was practically no private sector. The state had acquired over 80 per cent of the economy and played a dominate [sic] role… under the PPP/C, you saw a change… we had to bring our entire economy back to viability,” Jagdeo maintained, adding: “We are not ashamed of our record; [the] private sector has done well under the PPP/C in the past.”