As Guyana moves closer towards establishing local content laws, Vice President Bharrat Jagdeo said that there will be strong carve-outs that will see Guyanese companies exclusively benefiting from opportunities in specific sectors.
“There are some sectors that we are putting in the law that you’d have Guyanese businesses only competing against each other. There’ll be no foreigners to compete against because that carve-out will be made entirely for Guyanese in things like landscaping, logistics, transportation, food supplies, cleaning services… rentals – huge market for rentals,” Jagdeo said during a press conference on Friday.
He outlined that this will see tens of billions of dollars going directly towards locals in a vast list of sectors that will benefit fully-owned Guyanese businesses.
Apart from these exclusive areas, the Vice President noted too that the laws will also contain provisions for Guyanese companies to get a percentage of opportunities from the other sectors.
However, Jagdeo noted that there will have to be specific provisions in the legislation to define what constitutes a “Guyanese company” especially since more local entities are entering into joint ventures with foreign companies to tap into opportunities coming out of not just the oil and gas sector but from the development activities that are ongoing in other industries.
“We have several proposals including the issue of naturalisation and how we deal with that because once you naturalised, you get conferred all the rights of a citizen. So, that is a tricky issue but that means we’d have to control who we naturalised if we do decide to allow people who are naturalised because you can’t discriminate by law. So that issue has to be settled before (passing local content laws),” the Vice President stated.
Jagdeo further highlighted that they will also have to ascertain the composition of Guyanese companies, that is, determine whether they will have to be a fully-owned Guyanese company in order to benefit from these exclusive opportunities or at least 75 per cent Guyanese-owned.
“Are you gonna say only companies 100 per cent or you say companies that are at least 75 per cent owned by Guyanese because you also want them to get some capital and input too from abroad, you know, technology capital and stuff… Do you do that or do you say 100 per cent? These are the issues that are worked out before,” he stated.
However, the Vice President explained that there will be some time before these provisions are effected. As such, Guyanese companies will be allowed to get themselves ready to tap into these highly specialised areas.
Meanwhile, during Friday’s press conference, VP Jagdeo also criticised the former APNU/AFC Administration for failing to put the necessary local content infrastructure in place.
“So, you had foreign companies taking over every sector… [But now] the companies know what’s coming – local content with strong carve-outs for Guyanese,” he posited.
After assuming office in August last year, President Dr Irfaan Ali established a High-Level Local Content Panel to review policy initiatives on local content in the petroleum sector and provide guidance for the development of Guyana’s Local Content Policy and Legislation.
The panel, chaired by Shyam Nokta, compiled and submitted the Local Content Report.
Also on the panel were Carl Greenidge, Carvil Duncan, Anthony Paul, Kevin Ramnarine, Floyd Haynes, and the Ministry of Natural Resources’ Legal Officer Sasha Rajkumar-Budhan. The end product was a list of recommendations and subsequently, a draft Local Content Policy that the Government had released in February of this year.
The stakeholders’ consultation on Guyana’s draft Local Content Policy for its petroleum sector started in February and President Dr Ali himself opened the discussion from which authorities were expected to receive feedback and comments for the finalisation of the critical document.
Approximately 140 stakeholders were engaged by the panel on the compilation of the report. The report outlines several recommendations to improve the country’s policies and legislation.
However, even as the Guyana Government pushes to have a Local Content Policy that will see Guyanese play a greater role in the advancement of the petroleum sector, United States oil major ExxonMobil – which is Guyana’s biggest foreign investor – had cautioned last month that unrealistic local content targets can have negative consequences.
This was acknowledged by Haynes, who is a financial analyst. He told this publication in a subsequent interview that a balance has to be struck to achieve deliverable local content.
“There has to be a balance that has to be struck. We cannot come out and force the companies to implement or embrace these policies 100 per cent immediately. There has to be a gradual process. And the reason is because we have to make sure that our businesses and our people are sufficiently trained and have the necessary qualifications and those types of things,” the local content panellist explained.