-can earn more than US $400M from oil and gas
–Gov’t plans to spend big on training Guyanese

WITH the passage of the new Local Content law, Vice-President Dr. Bharrat Jagdeo has highlighted that Guyanese nationals and businesses are expected to earn more than US $400 million annually.

The Vice-President said this during a televised interview on Friday, where he also talked up the government’s plans to invest heavily in training thousands of Guyanese to guarantee that even more earnings can be secured in the future.

The new Local Content law was enacted in December 2021, and demands oil-and-gas companies, their contractors and sub-contractors to hire/procure goods, services and employment from Guyanese companies and Guyanese nationals. Outlined in the first schedule of the Act are 40 different services that the aforementioned parties must utilise by the end of 2022.

Those 40 different services were determined after consultations with local service providers. Essentially, it outlines the level of service and the number of goods local entities can provide currently. A percentage requirement for the procurement of these goods and services by the end of 2022 has been detailed, too.

While this law has been hailed as a much-needed avenue for Guyanese to capitalise on the country’s burgeoning oil-and-gas industry, the Vice-President pointed out that the law will directly contribute to an increase in earnings.

In fact, Dr. Jagdeo explained, “We believe that we can supply those goods and services now; this could be US$400 million to US$600 million in a year in those areas that we have carved out for our people already.”

For context, the estimated earnings highlighted by Dr. Jagdeo are expected from the provision of the services in the 40 specified areas.

By the end of 2022, 100 per cent of the services in the following areas should be from Guyanese businesses: Immigration support, custom brokerage services, ground transportation (moving personnel), and local insurance.

The other remaining areas have targets ranging from five per cent to 90 per cent, but it is expected that, over time, skills training and knowledge transfer could lead to increasing capacity, and increased local participation.

It is important to note that these earnings add to what the government is expected to receive through royalties, and from the sale of its share of the profit oil that is produced. Guyana has already earned about US$608 million from the sale of its share of profit since production started in December 2019.

The Local Content law, however, allows for a review of the 40 sectors, over time, and the government has already signalled its intention to increase the number of sectors carved out for Guyanese, once local capacity is built. Increasing the percentage requirements has also been alluded to.

To do that, the Vice-President said that the government has to invest in training Guyanese, especially in the more technical competencies.

“In the budget, you’re going to see more money for training Guyanese to ensure that they get more jobs, now we are establishing a training institute from this budget, and we have set aside money to train welders and everyone else,” the Vice- President revealed.

The budget he referred to is the 2022 National Budget. According to a statement issued on Friday by the Ministry of Finance, that budget will be presented to the National Assembly on Wednesday, January 26.

And the Vice-President emphasised that this targeted investment in training Guyanese is part of the government’s efforts to “grow the oil and gas industry in a manner that creates more value for people.”

Previously, Minister of Natural Resources Vickram Bharrat had noted that with the passage of the Local Content legislation, the government will continue to hold consultations on how to further strengthen the Act to the country’s benefit.

Now that the legislation has been enacted, it provides for the creation of two local content registers: At a local secretariat that will encompass Guyanese nationals to work in the new sector, and Guyanese companies that can provide goods and services as needed.

This law has been notably welcomed by members of the local private sector. Based on reports, several of the private sector bodies will be encouraging their members (Guyanese businesses) to register at the secretariat, so that they can benefit from the procurement opportunities that will arise because of the law.