Foolproof provisions in the Local Content Law seem to be working in the government’s favour as it has easily identified companies and persons trying to cheat the system. According to Vice President, Dr Bharrat Jagdeo, the administration was able to identify foreign companies which have been posing as locals to access the multimillion-dollar carve-outs for Guyanese in the law.
The former President said, “A lot of foreign companies are trying to beat the Local Content Law. We have a big battle with some of them trying to change the way they incorporate and trying to use legal means to bypass the preferences we have given only to Guyanese. But we have a strong position on these matters and you may see us ending up in court with a few of them. We are not allowing this to happen.”
The Vice President added, “Some of them are creating shell companies, getting someone who has never been to Guyana for 20 years or so; like their grandfather might have been here and then coming in suddenly to incorporate…”
Jagdeo said these schemes are being employed to access the areas in the oil and gas industry that have been ringfenced for Guyanese. These include rentals, security, cleaning, transportation, and catering.
The government estimates these carve-outs to be worth US$700M annually.
It was on December 31, 2021, that President Dr Irfaan Ali assented to the nation’s Local Content Legislation.
The law serves to provide for the implementation of local content obligations on persons engaged in petroleum operations or related activities in the petroleum sector. It prioritises Guyanese nationals and Guyanese companies in the procurement of goods and services for the enhancement of the value chain of the petroleum sector and enables local capacity development.
The First Schedule of the law ring-fences 40 categories of work for Guyanese participation, which include: food supply, rental of office space, accommodation, insurance, accounting, legal services, engineering and machining, aviation support, public relations, manpower and crewing services, dredging services, ventilation, environmental services and studies, and transportation.
The foregoing categories carry varying percentages for participation that have to be secured by companies by the end of 2022.
