By Kurt Campbell
Five months after the passage of the historic local content legislation, the government continues to express frustration with the underhand practices of some foreign companies operating in the local oil and gas sector.
In the first implementation consultation on Tuesday since the law was enacted in December 2021, Natural Resources Minister Vickram Bharrat said the government was unhappy because some foreign companies were still short-changing Guyanese.
“This is something we are looking at and I can tell you that the government is not happy about it because it shows bad faith on some behalf.
“We have always been straight up and honest to companies and investors and we only expect the same in return. That is all we are asking for,” Bharrat implored.
Although many of the provisions in the Local Content Act does not come into force until the end of 2022, Bharrat said the continued practices were dishonest on the part of these companies at a time when the government is extending a helping and supporting hand.
Among the disturbing practices, according to the Natural Resources Minister, is the lengthy wait local companies have to endure before they are paid for goods and services supplied and the hiring of employees through external manpower agencies without accounting for those persons when submitting documents to the government.
“When you do that, you are short-changing Guyanese in Guyana. You are short-changing the people in their own country. I’m saying this because the government of Guyana will not tolerate such behaviour.”
Bharrat explained that companies were engaging in these practices to satisfy requirements in the legislation in order to be considered a local company and benefit from provisions made in the law for Guyanese.
Among those provisions is that the company must have over 50 per cent Guyanese ownership, 75 per cent Guyanese management, and 90 per cent Guyanese as the total staff, after which they will be able to supply services and goods under a legislated schedule that makes specific provisions for Guyanese to benefit.
In detailing the government’s concerns, the Natural Resources Minister said the bundling of services when advertising contracts for locals need to be addressed.
He said while local companies may be able to provide some of the services, like garbage collection and security, when it is bundled with shore base services, it prevents Guyanese from being awarded the contract.
“We want to work with you to ensure we stop this practice,” he said even as he lamented the many complaints he has received of Guyanese companies having to wait six months and sometimes an entire year before being paid.
“There aren’t many Guyanese companies that can wait six months and one year for payment. Maybe a few can wait three to four months. But many don’t have the resources to start a new job without the payment from the last. They depend on that revenue and that is the challenge and limitation of local contractors.”
The minister said he hopes that companies, while working with the secretariat can set reasonable time frames that both parties can work with.
“Otherwise, you are going to kill our local contractors off and create an unfair competition… it is unfair to ask companies to wait six months sometimes for small payments like $5,000, $10,000 and $15,000,” the minister said.
Bharrat was particularly concerned about the use of manpower agencies for hiring by these companies. He said while the government is not against the use of these agencies the company must report to the Local Content Secretariat that those are among its staff.
“You can’t say they are not because they come from these agencies… I am speaking generally; I don’t want to point out a company doing that but I know who is doing it,” he added.
Bharrat warned that in due course, these among other disturbing practices, will see companies being penalised once they are caught in attempts to fraud the system or simply not in compliance with what the law dictates.
“I don’t even have the power to waive this so it will be you and the law.
“We don’t want to keep going back and [making] amendments to the laws. We expect in principle that we can resolve these issues because we know all the corners too…this is Guyana, so it’s difficult to come into Guyana and fool us,” the Natural Resources Minister told those gathered at Duke Lodge, Georgetown for the consultation.
Bharrat said his comments were offered in good faith and only geared towards the successful implementation of the law which he said should not be viewed as a disincentive for foreign investors.
“The only intention behind the law was to ensure Guyanese benefit from the new sector. That’s was the only intention and it will remain so.”
Bharrat said the government has also committed to doing work to improve the ease of doing business for investors and will soon begin work on implementing a single window system which will not only guarantee simplicity but also save time.
He said there is also an intention to put in place a ceiling for persons seeking approval from the Local Content Secretariat which he said is fully operational and now located in the former Guyana Rice Development Board building on Cowan Street, Georgetown.