Guyana needs an informed and dispassionate debate on local content policies for oil industry

The heading of yesterday’s Sunday Stabroek column by Professor Clive Thomas “Why local content measures are considered ‘backward backdoor protectionism?”, while framed as a question, conveys in my view, an unfortunate negative connotation about local content policies. Dr. Thomas holds the prestigious and influential position of Presidential Advisor on Sustainable Development and his writings will no doubt help to shape national policies. Admittedly, the two preceding columns seemed more disposed to local content requirements (LCR) in oil and gas contracts but in this latest column, I am less sure.

Oil discoveries have been made in deepwater areas off Guyana, which means that the first time we will be able to use our oil is after it has been shipped off to a refinery and re-imported into Guyana. If the advisers, policy makers and the managers of the economy, choose to think that local content is not an important matter, the public needs to understand that the major difference between when the first oil flows and now, will at best be manifested in lower domestic fuel price and the balance going into the public revenues. Under Guyana’s model Production Sharing Agreement, there is no separate tax revenue: the Government’s share of profit oil includes the taxes. What this means is that we can use our share of profit oil as we see fit: the Government can sell the oil on the domestic market at reduced prices, or put the value into the Consolidated Fund, or a combination of the two. At this stage, the Constitution allows only for a single Consolidated Fund and would need to be amended to create a Sovereign Wealth Fund.

Dr. Thomas’ column yesterday seeks to summarise two reports on local content policies in the petroleum sector. The first is by the United Nations Conference on Trade and Development (UNCTAD) and the other by the World Bank. I do not share Dr. Thomas’ view of these as examples of “even more formidable body of empirical studies examining the operations of LCRs in the oil and gas sector”. Guyana has certainly gone through an intellectual transformation from the days when the World Bank-endorsed IMF’s Economic Recovery Programme (ERP) was parodied as Empty Rice Pot by the leadership of both the PPP and the WPA. Continue reading Guyana needs an informed and dispassionate debate on local content policies for oil industry

Current petroleum regulations require oil companies to incorporate local content in their operations

Guyana’s oil discovery has attracted droves of foreigners, from near and far, even as the country grapples with concepts of local content – presumably for the current generation – and Sovereign Wealth Fund for succeeding generations of Guyanese. What is surprising is that we speak of local content as if the concept is new to Guyana and the sector. In fact, it is not and here is why.

The Petroleum (Exploration and Production) Regulations 1986 contains a requirement that the application for a petroleum prospecting licence and for a petroleum production licence must contain a statement giving particulars of the applicant’s proposals with respect to the employment and training of citizens of Guyana while in the case of the production licence there is the additional requirement that the application shall include a report of the goods and services required for the production and processing operations which can be obtained within Guyana and the applicant’s intention in relation thereto. Continue reading Current petroleum regulations require oil companies to incorporate local content in their operations

It is a misconception that the Constitution gives precedence to judges for appointment to Gecom Chairman

I have followed with more than passing interest the debate on the interpretation of Article 161 of the Constitution which deals with the Guyana Elections Commission (Gecom). Article 161 (1) requires the Chairman to be full-time and mandates that he shall not engage in any other employment. The real debate however has been in relation to Article 161 (2) which deals exclusively with the Chairman and his appointment.

For brevity, let me state that 161 (2) sets out the classes of persons eligible for appointment as Chairman as: current or former judges, persons qualified to be appointed as a judge (which is seven years after admission to the Bar) or other fit and proper person. The persons shall be named in a list submitted to the President by the Leader of the Opposition, not unacceptable to the President. Article 161 (2) has a proviso which states that if the Leader of the Opposition fails to submit a list, the President will appoint as Chairman a judge, former judge or one qualified to be a judge. Continue reading It is a misconception that the Constitution gives precedence to judges for appointment to Gecom Chairman

Phillips misrepresented the contents of the SARA Bill

Messrs Eric Phillips in a letter dated February 28, and on the newspaper’s Blog, and Tacuma Ogunseye in a letter dated March 1, 2017, both employed in the State Asset Recovery Unit, threw caution, logic, facts and decency to the wind in defence of their boss, Professor Clive Thomas. Based on a subsequent telephone call I made to Mr Ogunseye, a friend of many, many years, it appears that his problem with me is a concern that I am engaged in the formation of a third party.

I never thought that the exercise of a democratic right of a citizen would cause such concern to a genuine freedom and resistance fighter, and I can only guess at the effect political power, absolute loyalty and employment have on people. While it is my right to engage in political activity of my choice, to put Mr Ogunseye’s mind at ease, I assured him that I am not and have not been involved in any discussion or plan to establish a political party. Continue reading Phillips misrepresented the contents of the SARA Bill

If the SARA Bill is not radically restructured it will be challenged in the courts

Professor Clive Thomas has a deserved reputation as an outstanding economist, particularly in sugar and monetary economics, a champion for bread and justice, for human rights and for free and fair elections. Perhaps because of this, his professional reputation remained intact despite his role as co-leader of the Working People’s Alliance to which he was elected in 1985, which I believe was the last time the WPA held any internal party elections.

Prof Thomas represents the WPA in the APNU leadership and since May 2015, has held prominent positions as Presidential Adviser on sustainable development, Chairman of GuySuCo and Director of the State Assets Recovery Unit (SARU). While his contribution as an adviser is unclear, his role in sugar and SARU has done little to match his academic reputation.

He was a prominent member of the Presidential Commission of Inquiry (CoI) in the sugar industry and the sole author of Volume 2 of the Report ‒ the Financial/Economic Analysis. Yet, not only has he never publicly accepted any responsibility for or association with the Report, but as GuySuCo’s Chairman, he has acted contrary to positions he took as a member of the Commission. On top of that, he appears not to have advanced a single solution to sugar’s problems, leaving it once again to the politicians. Sugar is in the same messy and uncertain state as when he assumed leadership of GuySuCo.

Still, it is Dr Thomas’s role in SARU that causes the greatest concern. Continue reading If the SARA Bill is not radically restructured it will be challenged in the courts