Local Content and Local Participation
The Local Content and Local Participation Policy & Framework for the Trinidad and Tobago Energy Sector (the Policy), approved by Cabinet in 2004, initiated the establishment of a Permanent Local Content Committee (PLCC), comprising a wide range of stakeholders, to oversee the implementation of the Policy and to report to Cabinet. This 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 (T&T) providers, and of its role in defending the right of the people of T&T to retain as much of the value from their resources as possible.
Importantly, the emergence of a prolonged period of natural gas field developments and production, created a sustained demand for skills and services that justified heavy investment in capacity building by the State and private sector, as exemplified by the University of Trinidad and Tobago, the TOFCO fabrication facility at La Brea and several design engineering and seismic data processing facilities. Each of these examples plays a role in helping T&T become an innovation driven economy and to provide export-oriented services.
The Permanent Local Content Committee is multi-sectoral, representing major stakeholders involved in capacity building, procurement and support for SMEs in the sector. It is currently led by Chairperson Ms. Nicole Olivierre and is supported by representatives from:
- Government Ministries
- Business Associations
- Civil Society Organisations
Local Content is the sum of the inputs of local goods and services, including employment, provided in oil and gas operations. Local Content can only be achieved when operators hire nationals and utilize 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.
To oversee and report on the implementation of the Local Content and Local Participation Policy Framework for the Trinidad and Tobago Energy Sector, by maximizing the level of participation of the nation’s people, enterprises, technology and capital through the development and increased use of locally owned businesses, local financing and human capabilities in the conduct of all activities connected with the energy sector, along its entire value chain, at home and abroad.
The Role & Mandate
- To ensure application of and adherence to the Policy by continually and closely monitoring activities generated in the energy sector to ensure that all projects include opportunities for the development of the expertise of nationals and maximise the level of local content and local participation
- To assist the Government and country in fulfilling their vision of maximising local content, participation, value addition and value retention
- To create an enabling environment aimed at increasing local private sector participation in all areas of the value chain from upstream to further downstream.
The PLCC provides strategic and technical advice and assistance to the MEEI in its role of managing the energy sector for the maximum benefit to the people of Trinidad and Tobago, via implementation of the provisions of the LC&LP Policy for the Petroleum Sector. The PLCC provides assistance to the Government and country in fulfilling their vision of maximising local content, participation, value addition and value retention.
In fulfilling its mandate, the PLCC will support the sector regulator, the MEEI, in developing and conducting the research, analyses, and the development of strategies, guidelines, systems, tools and procedures required.
The PLCC will also create an enabling environment aimed at increasing local private sector participation in all areas of the value chain, from upstream to further downstream, through implementation of the following Terms of Reference (TOR):
The objectives of the PLCC are encapsulated in its Terms of Reference (TOR):
- To review the policy document on local content and local participation with specific recommendations on the desired levels of local content to be contained in energy sector projects.
- To devise strategies to increase local content and local participation in all energy sector projects.
- To liaise with all stakeholders to promote local content.
- To prepare a list of activities involved in projects that ought to have specified levels of local content over the short, medium and long term.
- To review definitions and terms to determine a benchmark for local content, for example, local company.
- To liaise with the Work Permit Committee of the Ministry of Energy and Energy Industries to ascertain the national requirements for the recruitment, training and development of local staff and the transfer of knowledge and the transfer of technology to the services sector;
- To investigate projects in which imported technology could be unbundled and devise mechanisms to ensure local companies are contracted.
- To monitor the infrastructure needs (gas, water and electricity) to facilitate and improve the local content capability, for example, fabrication yards, industrial estates.
- To establish an appropriate methodology for monitoring the achievement of local content targets.
- To compare the cost of goods and services offered and contracted by the international companies in relation to local businesses
- To undertake all other activities that could assist the Committee in carrying out its mandate.
The goal of the PLCC is to direct efforts to maximise local content and participant in the following way and in the following key areas:
- Defining Local Content and participation in terms of the level of:
- Local Content, control and decision-making
- Local financing (preferential access to local finance – not just equal access)
- Requiring preferential treatment of local suppliers by:
- Ensuring that they are given preference and assurances from the principal operator, which is not differed to primary or other contractors. These assurances will include, access, treatment and re-imbursement for goods and services actually provided
- Addressing barriers that currently prevent this from happening.
- People development in key areas that allow locals to take more value added, analytical and decision-making roles to ensure that existing regulations and processes, like work permits, are aligned to ensure compliance with the policies and strategies. Examples of the high value-added skills targeted includes the following:
- General Management
- Design Engineering
- Project Management
- Seismic processing
- Human Resource Development
- Business Strategic skills
- Business Development
- Strategy Development
- Technology and business expertise that have value, consistent and sustained demand which might be transferable to other sectors of the economy.
- Areas for immediate focus will include:
- IT support, including seismic data management and processing support
- Maritime Services
- Business support services, including accounting, HR services and consulting
- Creating and maintaining databases of:
- Projects and operations work programmes, including their needs for the provision of goods and services and their scheduling
- Local suppliers of goods and services
- People development programmes and initiatives of the operators and their international contractor, including work permits awarded and the related commitments
- Business development programmes and initiatives
- The progress of activities of “in country” operators, State-owned companies and agencies and their contractors, including their: –
- Local Content and participation policies, strategies and initiatives
- Target, benchmarks and performance metrics
- Appropriate legislation, regulations and contracts.
The PLCC Secretariat provides administrative, operational and technical support (inclusive of intelligence gathering, research, analysis and communications) to the Permanent Local Content Committee and, particularly, to the Chairperson of the PLCC, to ensure that the Committee functions effectively and efficiently.
The work of the PLCC Secretariat is directed and monitored by the PLCC, this includes setting a programme of work, deliverables, priorities and timelines. The PLCC Secretariat is led by the Head of the PLCC Secretariat, who reports to the PLCC via the Chairperson.
The day-to-day work of the PLCC Secretariat, inclusive of management of the work programme and personnel is the responsibility of the Head of the PLCC Secretariat.
The PLCC 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.
The Benefits of Pursuing Local Content and Value Addition
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 T&T’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 of Local Content
Recognising 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 (1970) 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.
Head of PLCC Secretariat
Permanent Local Content Committee
Ministry of Energy & Energy Industries
Level 15, Tower C
International Waterfront Centre
#1 Wrightson Road
Port of Spain
Telephone contact +868 225 4334 (ext. 1537)
Fax: +868 225 5764