The Policy
The Local Content and Local Participation Policy & Framework for the Trinidad and Tobago energy sector (herein after referred to as the Policy), approved by cabinet in 2004, initiated the establishment of a Permanent Local Content Committee (Permanent Local Content Committee ), comprising a wide range of stakeholders, to oversee the implementation of the policy and to report to cabinet. The Policy was designed in alignment with the country’s aspirations as articulated in the vision 2020 plan for the sector. It was also in keeping with the government’s recognition of the huge value slippage caused by goods and services being provided by mostly foreign companies, often in spite of the availability of high quality Trinidad and Tobago providers, and of its role in defending the right of the people of Trinidad and Tobago to retain as much of the value from their resources as possible.
Local Content Defined
Local content is the sum of the inputs of goods and services provided by Trinidad & Tobago and CARICOM member countries, including employment, provided in oil and gas operations. Local content can only be achieved when operators hire CARICOM nationals and utilise companies that are beneficially majority owned by nationals. This relates to beneficial ownership, which is defined in terms of the person(s) who ultimately benefits from the proceeds of a company. Local content therefore is the outcome of companies’ hiring and procurement activities.
For locals to be employed or provide goods and services to the sector, they must possess the required competencies and capacity. Enabling locals to participate requires capacity development, which must be enhanced through experience. This in turn can only be attained through participation.
Value Addition
The Permanent Local Content Committee is seeking two types of value addition to be generated from energy sector activities:
- Beneficiation or forward economic linkages
Beneficiation relates to the mid and downstream activities involved in converting raw materials into final usable products and delivering them to users.
- Knowledge and technology transfer or lateral economic linkages:
Knowledge and technology transfer are obtained through two routes:
- Foreign to local
this includes building and enhancing capacity in people, companies, government or other services, utilities, institutions, infrastructure or facilities to support the oil and gas sector
- Oil & gas sector to other sectors
This includes harnessing the capacity built in the energy sector and transferring these to other economic sectors to enhance the productivity of those receiving economic sectors, improve national competitiveness, reduce imports and generate export opportunities.
Benefits
Pursuing local content and value-addition allows the government of Trinidad and Tobago to create an enabling environment to increase local private sector participation in all areas of the value chain, to ensure that the nation’s hydrocarbon contribute to the country’s prosperity and sustainable development for the long term.
The energy sector has traditionally been the major contributor of Trinidad and Tobago’s economic development and, via local content can further generate value and strengthen the country’s economy through the development of the nation’s human capital, promotion of the local private sector and assisting in the diversification of the economy away from petroleum. The education, training, experiences and business opportunities developed at the operating level of the energy sector can feed into the development of the nation as a whole. The development of industry and national capacity, which are transferable to other non-petroleum sectors, where more can be made of private capital and thereby strengthen Trinidad and Tobago’s international competitiveness.
Enforcement
Recognizing the value of Local Content and Participation and the mechanisms required to enforce the principles and ensure measurement, monitoring and reporting to the public, the original Petroleum Act (1969) and Regulations (1971) made provisions for all the critical requirements of implementing the key provisions of local content and value addition, capacity building and knowledge transfer in nationals and local businesses, replacing foreigners, giving preferential access to local businesses and keeping books and accounts of personnel and spending to allow for the ministry of energy and energy industries to monitor performance.
