Trinidad
- introductionOne of the fastest-growing and most stable business climates in the Caribbean
has made T&T a magnet for investors, particularly in the country's oil and
LNG
industry. Although central to revenues and growth rates, the government of
T&T acknowledges that its natural resources will not last forever, and is
making
concerted efforts to diversify the economy away from oil and gas.
Part of this diversification involves building domestic capacity, particularly
in industries which can benefit non-energy sectors of the economy. However,
although the government is keen to boost local content, there is no currently
existing legislative or regulatory framework which commits international firms
to local
content requirements.
Instead, the country's local content policy is expounded in a single, seven-page
document (written in Comic Sans font – perhaps an indicator of the country's
casual approach to the issue), the Local Content and Local Participation
Framework.
The policy, which was published in 2004, is frank about T&T's lack of
technological knowledge and human capital and the need to enlist foreign
companies. It
also stresses the need for evaluation and assessment, and advocates
benchmarking
local content against the experiences of other countries.
A 2008 Petroleumworld article concluded that since the Framework's publication
official launch in early 2006, very little progress has been made on installing
a
comprehensive regulatory system. Although a Local Content Participatory
Committee was established in late 2004, no permanent secretariat has been
created to
support it and little legal weight has been added to the local content policy.
The
situation has not changed in the subsequent two years: the government relies,
as
the 2008 article put it, on “moral suasion” rather than regulatory requirements
to impose local content quotas.
Six PSCs signed in July 2005 were the first to include local content
requirements, including provisions for technology transfer, local procurement,
and
unbundling contracts to meet the capabilities of local suppliers. Although
small,
T&T's service industry is relatively developed compared to some other
oil-producing states. Local service firms have been responsible for
implementing a number of
projects, particularly in the platform fabrication sector.
In the absence of a clearly defined government policy, the private sector has
been making efforts to fill the gap. The National Energy Business Alliance, a
group of ten organisations with interests in the energy sector, promoted the
original local content drive in 2002, and the South Trinidad Chamber of
Commerce has
been a notable advocate of a more integrated system. They assist members with
bidding for tenders and liaise with the government on the need to maximise the
use
of local companies. The Trinidad and Tobago Manufacturers' Association has also
proposed its own version of the local content policy.
The government is clearly aware that merely enforcing quotas for local content
is insufficient, particularly in light of the impermanence of T&T's oil and
gas. Therefore building local capabilities is vital to improving
competitiveness
in the international market. The Permanent Local Content Committee is tasked
with directing efforts to improve local capacity and developing sector-specific
reports.
For IOCs, the T&T market remains beset with complications. The lack of a
clear, legally defined framework for local content adds an element of
uncertainty
to any PSC negotiations. Some international firms have also complained that
local
companies hinder their own chances of securing contracts through poor training,
opaque or inefficient corporate governance, and a disregard for health and
safety standards .
Useful Links
local content in T&T: past and present
local content policy framework
South Trinidad Chamber of Industry & Commerce