Brazil’s Temer relaxes stringent local content requirements

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Brazilian President, Michel Temer

The Government of the Federation of Brazil has yielded to demands for higher minimum percentages as they edge closer to an industry-wide local content policy.

Brazil in recent years has become known for its stringent local content requirements; some of industry observers said hurt the industry. However some of these have been softened with the ascension to office of President Michel Temer more than a year ago.

It is reported that at auctions held in September and October 2017, local content requirement for offshore was set at 18 %, well construction 25 % and 40 % for sub-sea works. Between 2005 and 2015 the average local content percentage was 65 %, described as over-ambitious and seen as contributing to increased bureaucracy, higher pricing and delays. These, it was believed, led to an environment where corruption flourished. It is believed that a lowering of the local content requirements has led to a revival of investor interest in the bid rounds this year.

Lessons for Guyana

One of Brazil’s neighbours, Guyana, is in the midst of finalizing its own local content policy and framework, with advice from Trinidadian local content expert, Anthony Paul. The Guyana Private Sector, led by the Georgetown Chamber of Commerce and Industry (GCCI), has been calling for firm percentages for local employees and companies aiming to provide services.

The GCCI has criticized Guyana’s draft local content policy framework for not having, in its view, enough concrete percentages in terms of employment and service provision.