People’s Progressive Party (PPP) Presidential Candidate, Irfaan Ali says the lack of a Local Content Policy (LCP) before first oil will have negative impacts on the development of Guyana.
In an interview with the News Room, Ali said a Local Content Policy “is essential for ensuring that maximum economic benefit is derived from the production of oil and gas.”
He noted that “literature shows that countries which exploit oil and gas without an effective LCP experience less development when compared to those with sound regulatory policies.”
Ali argues that the policy is critical to ensuring that local firms, workforce and citizens are placed are in a state of readiness to benefit optimally from this resource.
“Because of the absence of an LCP our people may be caught with their pants down as oil flow through the system,” he said, adding that the local workforce has not been trained to take up jobs in this new sector and the private sector has not given incentives to prepare fully for oil and gas.
One of the critical benefits of having the policy in place, he said is the provision of a framework for the creation of value-added economic activities which can exceed the direct contribution from the production of oil and gas.
Aside from the creation of employment opportunities for the local workforce through the stimulation of investment and entrepreneurial activities, Ali said the policy is needed to create a framework for;
• correcting market failures that is required for optimal resource allocation;
• integration of local firms in the global economic network;
• improving the competitiveness of the non-oil and gas sector to avert the Dutch-disease;
• ensuring equitable distribution of wealth generated from oil and gas production;
• poverty reduction; and
• catalyzing the economic diversification and transformation of the economy.
Director of the Department of Energy, Dr Mark Bynoe recently disclosed that the final draft of the local content policy was completed but with no sitting of the National Assembly in the near future, it is unlikely that the policy will be passed before 2020 when first oil is expected.
If elected to office at the next General and Regional Elections, the PPP Presidential Candidate said his Government will do everything to ensure that LCP is drafted and implemented.
The PPP-C Government he said will aim to:
• promote the use of domestic material and services by companies directly involved in the production of oil and gas;
• equip our people with the requisite training to take up jobs directly and indirectly created in the oil and gas sector;
• provide incentives for companies to retool and reorganize to exploit business opportunities downstream; and
• provide the enabling environment for attracting greater investment in the sector.
These objectives Ali said will ensure that every Guyanese benefit equally from the positive developmental outcomes that are expected to accrue from the production of oil and gas.
