Govt failed to monitor local content implementation, protect Guyanese interests – GMSA

The Guyana Manufacturing and Services Association (GMSA) has called out the Government for its inaction and failure to adequately police the oil and gas sector, even as locals continue to be disadvantaged in favour of foreign companies.

According to the GMSA, local content legislation that is enforceable and clearly defined is necessary. GMSA noted that such legislation must allow for the creation of local jobs, knowledge transfers, skills training, capacity building and internationally-accredited certification.

“The GMSA strongly recommends that the objective of Local Content Policy should revolve around definitive short-term benefits of natural resource extraction into long-term local economic development outcomes,” it said on Tuesday.

This, according to the GMSA, should be done through “capacity building, institutional strengthening via strategic policy intervention to promote domestic economic linkages, creation of employment and the participation of local Small and Medium-scaled Enterprises (SMEs) in the value chain through the supply of goods and services to the sector”.

It added that in order to ensure that the Local Content Policy actually works, it was recommended that the Government look at Local Content Policies and legislation in other jurisdictions such as Ghana.

Following a deluge of complaints and reports that foreign companies are using concessions from the Government agencies to displace local competition, GMSA urged the Government to examine the situation and if necessary, make the same concessions available to locals.

“We are strongly of the view that a critical evaluation should be undertaken of all foreign-based companies that have been provided with concessions by the Government. We urge the Government of Guyana to do so in order to ascertain whether there exists any Guyanese company that has been and/or will be disadvantaged as it relates to unfair competition, particularly within our Manufacturing and Services Sectors and beyond”.

Local manufacturers, the GSMA said, continue to face the hardship of being unable to enjoy the same benefits as foreigners entering into the country primarily to maximise the benefits associated with the new oil and gas industry. For this reason, the GMSA would like the emphasis to be placed on the need to derive more benefits from Guyana’s natural resources.

The association explained that robust mechanisms must be in place to monitor local content development, though it acknowledged the role being played by the Centre for Local Business Development (CLBD). GMSA noted, however, that there has been no serious monitoring of the sector to date.

“To date, we have observed that there are no dedicated monitoring and evaluation mechanisms and/or institutions empowered with regulatory authority and autonomy to ensure the implementation of Local Content Policy in Guyana. As such, the GMSA believes that an independent commission should be an obvious body to remedy this anomaly”.

In this context, GMSA supports the formation of a local content commission to ensure that the intended goals are achieved and for necessary policy adjustments to be made if and when these become necessary.

Originally scheduled for 2020, the projected start of first oil production for Exxon and its partners has been moved up to next month. A Floating Production, Storage and Offloading (FPSO) vessel has already arrived in Guyana’s waters, with Dutch firm SBM Offshore constructing a second one for offshore Guyana.

The only piece of oil-related legislature that has been made official is the Natural Resources Fund Act. Everything else has been in development. Safeguards like a Local Content Policy is still not in place to give guidance on local content for Guyanese.

When the second draft of the Local Content Policy was released, the policy itself admitted that it does not deal with mid and downstream oil and gas initiatives but rather, the direct, upstream parts of the sector.