Guyanese citizens to benefit from Local Content Bill
The Government of Guyana will soon lay in the National Assembly its Local Content Bill which could see the country setting strong targets for companies operating in the oil industry.
The Local Content Bill will allow Guyana to capture the benefits of foreign direct investment by enabling conditions for investors to ensure value addition in the country for local industries.
The Bill’s first schedule would mandate a near takeover of oil operations by local goods and services in 10 years.
The schedule sets out local content levels to be met by licenced oil companies from the date of effectiveness of their petroleum agreements or licences. These would include companies like ExxonMobil and Tullow Oil, and subtractors Saipem and Schlumberger, which have entered into agreements with the Government to explore and develop oil blocks.
Although Guyana has been producing oil for less than two years, the private sector has made significant local content progress, and therefore the Government is pursuing local content legislation to further support long-term benefits of energy development.
Local content policies, which are used by most oil-producing countries, create incentives for local businesses, services, and workers from the home country to be included in the development process of a specific sector or broader economy. While these policies ensure inclusion of locals, they also seek to create opportunities for international expertise and transfer of skills and technology to the local market.
President Dr Mohamed Irfaan Ali has said the legislation will be introduced in Parliament before the end of the year.
The draft Bill contains multiple tables, outlining the percentage of local penetration necessary in the beginning, after three years, after five years, after seven years, and after 10 years.
In employment, the schedule sets out the percentage of posts at different levels, which should be given to Guyanese in companies’ upstream, midstream and downstream operations.
Quotas are set for management, supervisory, technical core and professional support staff, along with semi-skilled and unskilled workers.
For instance, a company’s upstream management posts should be 10 per cent Guyanese from the beginning of its agreement and should move to 45 per cent at the 10-year interval.
Guyanese are to be given 100 per cent of posts involving unskilled work from the inception since this constitutes low-hanging fruit.
Using a similar system, the schedule seeks to set quotas by sector, for the provision of goods and services throughout the 10-year period and onward. Most sectors’ quotas for the utilisation of local goods and services stand at 85-100 per cent at the 10-year target.