“It is pointless for the government for the government to pursue a local content policy and the accompanying law if it is not going to remove the regulatory and administrative barriers that make it difficult for local businesses to truly harness the benefits of the oil sector.”
Those were the words of Chatham House Advisor and Local Content Expert, Renee Roger Tissot. The Consultant is currently preparing to host a major local content conference in Guyana next month. This comes after his two-year study on the country.
During his interview with the Guyana Standard today, Tissot insisted that the coalition government will have a prominent role to play in reducing regulatory and administrative barriers to domestic investments. If local businesses are to benefit, he emphasized that the government needs to provide fiscal incentives and get the oil companies operating here to establish or support the development of small and medium enterprises in the host country.
He suggests that this be done by setting aside a special fund.
Further, Tissot said that the coalition administration needs to update intellectual property laws to provide greater protection for domestically produced technology; simplify approval processes and fees for licenses and permits and ensure greater inter-ministerial coordination amongst key ministries and agencies that have roles to play in the employment, training and education components of local content.
Tissot stressed that Guyana’s authorities need to take a collaborative approach to developing its local content policy.
He believes that the approach must entail discussions with the oil companies as well as indigenous businesses so as to set out realistic and achievable local content requirements and targets.
“After doing this, the government can move to develop regulatory and institutional frameworks for the delivery of the agreed targets. Many are in a rush to just pass a Local Content Policy and law but I assure you, there is a strong economic case, in terms of cost, reputation and effectiveness for adopting a collaborative approach,” the Local Content Expert expressed.
Expounding further on this point, Tissot said that when the collaborative approach is not taken, oil companies “tend to do as they feel, they don’t comply at all.”
He said, “So the government in some cases and even the businesses often seek recourse in the justice system (because targets are not met). But I have seen these carry significant financial, legal and reputational risks for national authorities, especially when local content becomes subjects of extensive litigation.”
Tissot added, “Such risks may also manifest themselves in disruptions to petroleum operations due to disputes, such as community protests over a perceived lack of benefits from a project, including potential harm to employees due to such protests.”
Furthermore, the Local Content Expert said that in a competitive oil and gas sector, a country’s ability to attract investors and technologies (including financial institutions and lenders) needed to develop oil resources will depend on the practices and approaches put in place to reduce contractual risks, such as those that could result from misaligned Local Content Policies.
He warned as well that misaligned policies could land the government in allegations of corruption and/or material breach of contracts.
Therefore, to minimize legal contentions and risks relating to this subject matter, Tissot insists that the Government of Guyana must establish clear, transparent and comprehensive local content laws and policies that are hinged on a collaborative approach.
Tissot concluded, “As it stands, this approach is not being taken and Guyana is exposing itself to great risk.”
