Encourage & support local initiatives in oil market

Dear Editor,
I commend Vice President Jagdeo for his strong position on increased utilisation of local content in the emerging oil and gas sector of the economy as he announced in his latest press conference. The foreigners are milking the system and the contract while locals are neglected. Worse, locals are not adequately included in the chain supply of goods to and labour on the offshore base. Local investors must be encouraged and supported by Government to get into the oil and gas business – to manage onshore bases addressing needs, services and supplies of the offshore rig. Jagdeo must be complimented for announcing that Guyanese would be given first preference in the emerging oil and gas market unlike what has happened so far under the policy of the predecessor coalition regime. Preference must be given by local Guyanese companies with priority given to those who championed democracy followed by those in the diaspora who supported the struggle for the restoration of democracy in the homeland. They should team up with foreigners where Guyanese lack capacity and capability.

Heretofore, almost every input in oil production has been foreign. Labour was brought from overseas. Even cooks are imported. The use of local labour has been limited and restricted to basic manual movement of goods and pipes, cleaning, and medical services. And they are at the bottom of the pay scale. The onshore base and its management base have been foreign. Even most food has been imported with limited supplies of local pumpkin and bhajji, papaya, bananas and watermelons. This must change; it is hoped that local content proposal addresses these imbalances. There should be specific targets (percentages of local content). Otherwise, there will not be significant benefits for Guyana.

Guyana needs its own onshore base owned and managed by Guyanese. Investing in oil and gas base or establishing a refinery or power generation using gas transported from the gas fields may be financially prohibitive for one company or investor in Guyana. It may require a team of investors to come together to get into the business, or else the foreigners would move in and control the onshore base as is currently happening. Supplies are also taken directly from Trinidad to the onshore production site. Guyanese are excluded from the financial largesse. Potential local investors should team up, forming a conglomerate (companies from unrelated businesses), bringing their financial resources together to get into onshore base management. That conglomerate can then link up with foreign companies in USA, Middle East, India, etc to raise the required capital to build onshore bases. Demerara and Berbice Rivers, and even islands in the Essequibo River, are ideal for onshore bases. The Vreed-en-Hoop area is perfect for an onshore base.

Around 2005, I prepared a proposal for a duty-free port at the Vreed-en-Hoop stelling; it was not acted upon. Onshore bases can help meet the needs of the offshore production of oil and gas and in so doing create a lot of jobs for Guyanese as well as wealth in the economy. The wealth will remain in the country rather than be expropriated to foreign bank accounts. And a duty-free port can attract businesses to Guyana. Onshore bases and overall oil management and duty-free ports are where the money is – not low paying manual labour. Local Guyanese should be encouraged to pursue studies on petroleum engineering and offshore base management.

The foreign companies have gotten a lot of benefits for their production – duty-free imports and tax-free labour. Similar incentives must be given to local companies. Incentives would encourage aspects of new business activity that bring employment benefits to locals. Economic development projects must be dominated by local business interests, including Chambers of Commerce, local banks, and local real estate developers. And these must be supplemented by local staff and local food (with imports permitted where local is not practical). Those of us who study economics would know that theory, empiricism, and practice have shown that economic development incentives will encourage investment. And locals have a love and patriotism for the country lacking in foreigners. When treated similarly to foreigners, locals will outperform them and create greater wealth for the country. The local companies will keep and invest their wealth, growing the economy and creating jobs. The foreigners will take their money and leave drying up Guyana as happened to so many emerging oil economies.

Yours truly,
Vishnu Bisram