Millions approved for Local Content Secretariat

The Committee of Supply on Tuesday approved $22 million to begin works on the establishment of the Local Content Secretariat – the body responsible for overseeing and implementation of Guyana’s the Local Content Act.

Minister of Natural Resources Vickram Bharrat shared this figure following questions from Opposition Member of Parliament, David Patterson during the consideration of the ministry’s expenditures for 2022.

Minister of Natural Resources Vickram Bharrat during the consideration of budget estimates on Thursday

The Local Content Act outlines 40 different services that oil and gas companies and their subcontractors must procure from Guyanese companies by the end of 2022. For instance, these companies must procure from Guyanese companies, 90 per cent of office space rental and accommodation services; 90 per cent janitorial services, laundry and catering services; 95 per cent pest control services; 100 per cent local insurance services; 75 per cent local supply of food; and 90 per cent local accounting services. These are just a few of the services highlighted in the first schedule in the Local Content Act.

Minister Bharrat was keen to emphasise that as the capacity and skills of Guyanese expand, so will the services in the local content legislation.

“It is a working and living document,” Minister Bharrat had said during the debates on the Local Content Bill last year. “Nothing in the local content bill is cast in stone. The local content bill will help us to understand the day-to- day operations of the oil and gas sector, and what certification is needed for our people.

We had to base our schedule on the number of consultations we had with the international oil companies, sub-contractors, the private sector and civil society… The schedule is based purely on consultations.”

These consultations lasted an entire year and guidance and support were even sought from other oil and gas producing states such as Ghana, Norway, Trinidad and Tobago, as well as local content experts.

Meanwhile, two registers are to be developed and maintained by the secretariat under this Act. The registers will comprise Guyanese companies that supply goods and employment services. The creation of these registers has already begun.

The Local Content Act clearly defines what is a Guyanese company and who is a Guyanese national. This is to prevent foreigners from disguising as locals.

As it relates to the definition of a Guyanese company, he outlined Guyanese must own 51 per cent voting rights and shares in the company. Further, Guyanese must hold 75 per cent executive and senior management positions, and at least 90 per cent of non-managerial and other positions, as detailed in the Act.

“We don’t want to encourage fronting,” Minister Bharrat had asserted. “We don’t want to encourage that because we have seen models around the world where locals would just act as a front for the foreign companies. We don’t want that. That is not the intention of a Local Content Bill. That will not bring benefits to Guyanese.”

The Act also details penalties for oil and gas companies and their sub-contractors who fail to meet the minimum targets of the legislation, as well as those who are in breach of the Act. These fines range from as low as $5 million to as high as $50 million.

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