A new policy has seemingly emerged with President David Granger now deferring all questions posed to him on Guyana’s oil and gas sector to the newly formed Energy Department under the Ministry of the Presidency.
The President articulated this policy when he was asked by the media about his views on direct cash transfers to households. Since this proposal was made by Economist, Dr Clive Thomas, the topic has generated much discussion from the man in the street to politicians.
When asked about the subject, the President had this to say: “As I said, all matters! All matters concerning oil and gas have been referred to the Department of Energy, including that proposal,” he said. “No, it hasn’t been discussed (at Cabinet) and it won’t be discussed until recommendations are made by the Department of Energy.”
The President was also asked about the Government’s local content legislative agenda. It was pointed out that the Georgetown Chamber of Commerce and Industry (GCCI) had been critical of the delay in enacting local content legislation.
In addition, the Chamber took it upon itself to submit model local content legislation to the Government. When asked about this, the President referred all such questions to the Energy Department. Granger also said that the Department was asked to engage the media next month.
“Last Friday I pointed out that all matters concerning oil and gas, all matters concerning (it), have been referred to the Department of Energy. And I’ve asked the Department of Energy to have an engagement with the media during the month of October, so we can respond to all the questions.”
“But I don’t want to deal with oil and gas in a piecemeal manner. And the Department of Energy and Dr Mark Bynoe will respond to those queries,” Granger explained to the media operatives.
It was only in July that environment and resource economist, Dr Mark Bynoe was appointed to head the department. He will have much to oversee; ranging from the local content policy to ring fencing and cost recovery claims.
Local content and what it will do for Guyana has been a burning question since the announcement of oil in the Stabroek block in 2015. After Exxon first tempered expectations by saying that few job opportunities will be created by oil, it has since said that it will help with local content delivery.
Criticisms
A contract was inked on October 7, 2016, between the coalition Government, Exxon Mobil and its partners in the Stabroek block. In the renegotiated contract, which has come in for some criticism, Guyana agreed to a two per cent royalty for every barrel of oil, a 50 per cent share of profit oil and a US$18 million signing bonus.
Out of the contract, Guyana also secured the company’s agreement to set up a fund for social and environment projects. Exxon has to contribute US$300,000 per year to this fund. The sums roll over and the company together with Government will determine which projects to fund.
The contract sets aside another US$300,000 per year to ensure Guyanese personnel are trained at local or overseas universities and conferences. There are also provisions for a continuous review of local content.
A draft local content policy created by the Government has meanwhile been criticised in recent months for lacking provisions which would safeguard against exploitation by companies, especially since there have been intensified reports of the local companies being bypassed for contracts and services with foreign companies being favoured.
The document does not cater for issues such as how to avoid procurement fraud, conflict of interest and favouritism, among others. According to the draft local content framework document, the policy seeks to address the suite of opportunities that may arise.
It also addresses the approaches to be taken in selecting and developing opportunities related to enhancing the capabilities of Guyanese nationals and businesses through training and well-tailored social contributions for greater impact and benefits among others.
Business Minister Dominic Gaskin had announced recently that the second review of the local content policy is expected to be completed by the first quarter of next year.
