Private sector officials say making local content too prescriptive can hurt industry

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Ramesh Dookhoo, Executive Member of the Private Sector Commission of Guyana

As discussions continue on the nature and type of local content mechanism Guyana should adopt in order to ensure businesses in the South American country benefit from oil and gas opportunities, some private sector officials are signaling that stringent laws could serve to hurt, rather than help the industry.

OilNOW sat down with Executive Member of the Private Sector Commission of Guyana, Ramesh Dookhoo last week for a wide-ranging discussion on Guyana’s preparation for first oil and the role of the business community.

On the matter of local content, Mr. Dookhoo said local businesses need to evolve naturally and the most effective way to do so is through partnerships forged, not because of a mandatory framework, but as a result of factors that are mutually beneficial. “I have my own reservations. I believe businesses should develop naturally and part of that development is about competition, it’s about copying, it’s about partnering, it’s about yielding to wherever the opportunities are,” he said.

In this regard he said from all indications businesses seem to be moving in this direction. “There are many companies that are gearing themselves; there are many companies that have created partnerships already,” the private sector official said.

The Georgetown Chamber of Commerce and Industry (GCCI) has been pushing for local content legislation as a preferred approach, rather than a policy framework which the Guyana government has been working to establish. But several stakeholders have warned that making local content too prescriptive can have dire consequences.

Mr. Dookhoo questioned the rationale behind pushing for stringent laws, particularly if the operator – in this case US oil major ExxonMobil – is demonstrating a commitment to not only use, but help build the capacity of local businesses so that they can ultimately benefit from opportunities. “For example Exxon has just created the facility at the top of the IPED building,” he said, referring to the Centre for Local Business Development which has been providing training and support services to Guyanese businesses.

Shyam Nokta, GMSA President

Speaking at the Guyana Manufacturing and Services Association’s (GMSA) 22nd Annual Presentation Awards Dinner on Friday, President of the entity, Shyam Nokta said, “A strong Local Content Framework is critical to ensuring that local businesses can be provided with that opportunity to participate in and benefit from this sector. However, I do believe we need to adopt a systematic approach and not be too prescriptive too early.”

The GMSA President also alluded to the Exxon business development centre. “The work of the Centre for Business Development needs to be recognized and I wish to commend DAI for the work they are doing,” he said, referencing the DAI tasked with the management of the facility.

“Many GMSA members have been taking advantage of the orientation and training opportunities from the Centre which is providing useful information, training and guidance to those businesses that are interested in participating in the oil and gas sector. I would like to urge more businesses to take up this opportunity,” Mr. Nokta said.

Guyana is in the process of finalizing a draft local content policy framework which officials at the Ministry of Natural Resources have said should be completed by the end of the year.