Local Content Bill proposes delicate balance for foreign and local companies
Proposed new legislation to regulate how foreign companies should operate in Guyana’s petroleum industry has sought to strike a delicate balance between the companies’ operations and investing in and using local goods and services.
The Local Content Bill, which has been the subject of robust discussions between the government, the local private sector and other stakeholders, was tabled in the National Assembly Thursday.
It proposes a raft of demands on foreign companies to ensure they use Guyanese individuals and companies for everything from catering services to accounting by the end of next year.
For example, the legislation if passed, will demand that Guyanese companies be engaged 100% in providing immigration support services, work permits, visa applications, and visa on arrival. There will also be a 100% demand for foreign companies to use local companies for ground transportation and custom brokerage services.
But the Bill proposes that the Minister can waive the requirements if he deems any petroleum operation to be of national interest and if there is lack of Guyanese capacity.
The Minister can also waive the requirements if a current contract in place – before the law comes into place – prevents the contractor from the minimum local content levels set out in the first schedule of the Act. This schedule sets out 40 areas under which local companies should be used, detailing the percentage requirement by the end of 2022.
“It is not a bill that is drafted in a vacuum.
“The issue of having local content is one that requires balance; it requires a thorough and sometimes sophisticated understanding of the realistic opportunities that are inherent in the development of a new sector like oil and gas,” President Irfaan Ali said at an event on Wednesday evening.
Overall, the legislation seeks to prioritise Guyanese nationals and Guyanese companies in the procurement of goods and services for the enhancement of the value chain of the petroleum sector and to enable local capacity development.
It seeks also to provide for the investigation, supervision, coordination, monitoring and evaluation of, and participation in, local content in Guyana.
Another objective is to promote competitiveness and encourage the creation of related industries that will sustain the social and economic development of Guyana.
The Bill proposes the setting up of a Local Content Secretariat that will develop and maintain a Local Content Registers of Guyanese nationals for employment and Guyanese nationals and Guyanese companies from which goods and services may be procured.
The Bill proposes fines and other disciplinary measures for companies that falsely represent to be Guyanese companies to benefit from provisions under the Local Content Act.
According to the Bill, a Guyanese company means any company incorporated under the Companies Act which is beneficially owned by Guyanese nationals who ultimately exercise, individually or jointly, voting rights representing at least fifty-one per cent of the total issued shares of the company.
Additionally, Guyanese nationals must hold at least seventy-five per cent of executive and senior management positions and at least ninety per cent of non-managerial and other positions;
In the case of an individual who false makes the claim that they are Guyanese will be fined $1 million while in the case of a body corporate, there is a fine of $5 million.
They will also be struck off the Local Content Register.
A Guyanese national and Guyanese company may apply for and be issued with a certificate of registration in a manner and form prescribed by the Secretariat.
This will be done provided that Guyanese nationals and Guyanese companies supplying goods or providing services to the petroleum sector immediately before the coming into operation of this Act, shall apply for and be issued with a certificate of registration within six months of the coming into operation of this Act.
A certificate of registration shall be an annual certificate that shall become renewable on the anniversary date of the issuance of the certificate.
Moreover, an application for the renewal of a certificate of registration shall be made to the Secretariat in a manner and form prescribed by the Secretariat.
Upon being issued a certificate of registration, the qualified Guyanese nationals and Guyanese companies shall be added to a Local Content Register.
A Guyanese national or a Guyanese company shall immediately notify the Secretariat where there has been a change in the status of citizenship of the national or a change in the composition of the company in contravention of the definition.
A Guyanese national or Guyanese company that is not registered on the Local Content Register shall not be measured for the purpose of compliance with the minimum local content levels.