During the Trinidad and Tobago Energy Conference, there was a very stimulating conversation about local content. The perspectives that were explored ranged from global to local. One perspective that was very pertinent was the Guyana perspective which was highlighted by Nicholas Deygoo Boyer, President of the Georgetown Chamber of Commerce and Industry (Georgetown Chamber).
Guyana just achieved oil-producing status earlier this year and has also just launched a local content policy. Boyer provided the context of the Georgetown Chamber’s views on local content policies.
Boyer asked, ‘What does local content mean to the Guyanese people?’ He said, ‘To us, local content is the level of usage of Guyanese goods, services, people, business and financing’.
According to Boyer, Guyana has a somewhat diversified economy and he said, ‘We hope not to lose that. Local content for us is not just a conversation about the petroleum industry. There are several other related industries including other extractives, agriculture that this conversation is going to happen around’.
He said that what is considered a local company is pivotal in determining benefits which accrue. He added that the definition of a ‘local company’ should broadly be in accordance with the following: i)The company’s board meetings are held in Guyana ii) The company’s head office is located in Guyana iii) a percentage of the total workforce is Guyanese and iv) the company is registered in Guyana with a Guyanese ownership of 51% or more.
During his presentation, Boyer mentioned that globally the thinking may differ, however, what is important to remember is the context. He said that Guyana is new to the industry. He added that an ideal policy must strengthen competitiveness and be in line with and exist alongside the national competitiveness plan. Boyer added that the policy should not exist on its own and it must be part of a whole — it should be paired with a petroleum commission, sovereign wealth fund and deletion policy.
It should have a clear timeline for the introduction of legislation so that it sends clear signals to foreign direct investors so that they understand the landscape. It should also encourage unbundling of contracts to allow new and fledgling firms to participate in the industry.
Boyer said that a local content commission should be set up to encourage monitoring and reporting. He added that this commission should be governed by a multistakeholder group.
He added that a good local content policy should also have consequences.
The Georgetown Chamber head also said that a good local content policy should feature transparency, ring fencing (for local manufacturers), value creation (knowledge transfer) and capacity building.
The Georgetown Chamber developed model legislation for discussion purposes and he indicated that legislation should promote private sector development and human capital development. He asked that the legislation also include some measures to deal with noncompliance.
Local content policies should provide clarity to foreign investors looking at the market opportunity in the country and have security that the rules won’t change. Local content should be about dialogue between private sector, the people and the operators.
Boyer said that local content would be enhanced if the government would assist in getting projects to move along faster. He indicated that it takes six months to get a construction permit in Guyana — if Guyana wants local content development, investors cannot wait that long to get approvals.
He added that investors should have market entry strategies that provide the return on investment that should be given for the expertise, equipment and capital that will be deployed in Guyana. But similarly, the Guyanese must benefit from the opportunities they possess.