Local content has emerged as a key priority for many resource-rich developing countries, including Trinidad and Tobago. Its role in deepening and widening linkages and sustainably boosting value between the energy sector and other productive sectors of the Trinidad and Tobago economy has been a topic of continuing discussion.
Trinidad and Tobago’s energy sector has been a major contributor to economic growth and vast surpluses from oil and gas over past decades have been channelled into economic diversification and industrial development.
In seeking to derive optimum benefits from the energy sector, an important consideration for Trinidad and Tobago was developing a local content policy as a means of leveraging the energy resources to influence the widest participation of our nationals with backward linkages and job creation.
To move the process forward, the then government in 2004, published a local content and local participation policy and framework. A Permanent Local Content Committee, comprising a wide range of stakeholders, was set up to monitor various activities in the energy sector to ensure that projects included opportunities for the development of the expertise of nationals and that they maximised the level of local content and local participation. Through local content, it sought to maximise the sector’s usage of local goods and services, people, businesses and financing.
Local content and the energy sector
One of the pillars of the local content policy was local capability development. The aim was to maximise the impact of ongoing sector activities through the transfer of technology and know-how to enhance, deepen and broaden the capability and international competitiveness of people and businesses within the sector.
The framework sought to create and enhance capabilities that were transferable to other sectors within the country. It also sought to create and support cluster developments with other industries that have a natural synergy with the energy sector and which may have the capacity to diversify and/or sustain the economy after hydrocarbon resources are depleted.
One of the projects that was deemed a successful transfer of knowledge and technology, and which pioneered a new engineering and fabrication industry, was the beginning of construction of offshore platforms in Trinidad. In 2004, BPTT’s Cannonball platform was the first to be built from scratch in Trinidad and Tobago, at LABIDCO’s then newly opened fabrication yard. Prior to the Cannonball Project, all BPTT’s platform projects were engineered and built externally before being shipped to Trinidad for installation.
Since then, the construction of offshore platforms at LABIDCO has generated value for country through local content. A 2013 World Bank report on local content policies in the oil and gas sector quotes a case study by the BG Group as reporting that an “estimated 99% of the 1.1 million hours work on the Poinsettia topsides were undertaken by Trinidadian nationals, demonstrating a particularly high level of local content in all management, technical, and administrative positions.”
Local fabrication activities from that and other projects have encouraged the development of nearby small- and medium-sized enterprises (SMEs), increased local employment in the community and environs and paved the way for wider export opportunities in oil and gas infrastructure fabrication.
That being said, in 2017 Energy Minister the Honourable Franklin Khan noted that apart from work captured by Trinidad Offshore Fabrication Unlimited (TOFCO) and the local services sector, more value could be retained in the economy from the energy sector. He was of the view that the local content policy framework and guidelines needed strengthening.
Given the many obstacles in local content development, Government gave a commitment to reconstitute and strengthen the Permanent Local Content Committee and review the local content policies and guidelines.
Two months ago, the Energy Chamber, a member of the Government’s Permanent Local Content Committee, launched its Local Content Management System (LCMS) to “provide a system for the measurement, monitoring and reporting of local content and capacity development performance across the energy sector.” Questions relating to how much local content value Trinidad and Tobago is benefiting from, indicate that clearly defined local content benchmarks in the value chains emerging from the energy sector should be measured.
Local content in NGC operations
Despite some shortcomings, Trinidad and Tobago’s local content framework has been looked at as a model for other countries developing policies and establishing administrative agencies to ensure maximum gains are received from their energy sector. Members of the Local Content Committee of Ghana’s Petroleum Commission on a visit to Trinidad were keen to learn about key strategies employed by The NGC Group to support and incorporate local content throughout its business operations.
When it comes to the award of contracts, The National Gas Company of Trinidad and Tobago Limited (NGC) aims to create opportunities for local, and where possible, community-based suppliers and contractors. A local content policy is being finalised to address the use of local resources in the execution of contracts.
Over the last few months, NGC has been recalibrating its prequalification procedure to allow for greater participation of local businesses in the Company’s supply chain over the long term.
In the past, prequalification criteria excluded companies whose resource capabilities and experience did not meet with NGC’s standards and expectations. Soon, suppliers wishing to be prequalified who do not meet all the criteria will be given conditional prequalification status as well as the appropriate guidance to improve their chances of being engaged.
NGC’s Vendor Management team, which is overseen by the Supply Chain Management Division, will be directly responsible for working with suppliers and contractors who fall short of prequalification criteria. The officers will identify the shortcomings – be they related to areas such as finance, equipment availability or minor shortcomings in technical submissions – and coordinate with the respective internal departments to help the applicant address and overcome those deficiencies. In this way, the prequalification process will become more of a continuous improvement tool rather than a barrier to inclusion. It will give suppliers with an interest in doing work with the Company, and a willingness to grow, the chance to remain in contention for future projects.
Strong local content is widely accepted as a means to maximise endogenous value creation, for its multiplier effect in the economy, and its role in strengthening local skill sets and capabilities. NGC’s particular approach is further helping to enhance the competitiveness of suppliers so they can build their businesses and profitability.
NGC’s approach to corporate social responsibility also keeps local content top of mind. Investments in groups and causes are now increasingly geared towards building capacity and sustainability, to develop local talent and competitiveness in international markets and industries.
Deepening impact
Local content policy in resource rich developing countries such as ours can indeed be a strategic tool to develop backward and forward linkages that are pivotal to the energy sector fully integrating across different aspects of economic development. For its part, NGC and its subsidiaries have made local content a tenet of its growth philosophy, and intends to push for its business to have even greater impact in the domestic space through this important policy consideration.
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