Local Content Bill sets out parameters for employment
Six years after the discovery of oil offshore and more than two years after production began, Guyana’s Local Content Bill was yesterday laid in the National Assembly, setting out the minimum percentage employment and goods and services procurement for locals, while requiring that the data to substantiate the claims be submitted every year.
“The Local Content Bill 2021 represents the principal vehicle through which Guyana seeks to negotiate a tradeoff between investors engaged in the petroleum sector and Guyanese nationals and Guyanese companies involved in the petroleum sector,” the Bill tabled in the name of Minister of Natural Resources Vickram Bharrat stated.
Local content has been a hotly debated topic in recent months.
“The Bill endeavours to do so by striving for economic diversification through prioritising Guyanese nationals and Guyanese companies in the procurement of goods and services for the enhancement of the petroleum sector value chain. This prioritisation will guarantee that there is an increased retention of the economic benefits in Guyana while simultaneously allowing for there to be an upsurge in the number, competencies, and capabilities of Guyanese nationals and Guyanese companies participating in the petroleum sector,” it adds.
To deliver on its legislative target, the proposed legislation, “puts in place regulatory mechanisms to implement, investigate, supervise, co-ordinate, monitor, and evaluate participation in local content in Guyana. Altogether, the Bill provides for the promotion of competitiveness, and the encouragement of the creation of related industries that will sustain the social and economic development of Guyana as well as other related matters.”
Making it explicit that when “Guyanese company” is referred to, the Bill states that it should be interpreted to mean “any company incorporated under the Companies Act - (a) 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; and (b) that has Guyanese nationals holding at least seventy-five percent of executive and senior management positions and at least ninety percent of non-managerial and other positions.”
A “Guyanese national” means a citizen of Guyana.
Concerns have been raised about foreign companies coming here and registering, thereafter referring to the respective establishments as being 100% Guyanese.
A Local Content Secretariat will be established within the Ministry of Natural Resources and the Bill sets out a list of its functions, which includes developing and maintaining measures for the effective implementation of local content by contractors, sub-contractors and licensees.
The Secretariat will also ensure that there are developing and implementing strategies that will give preference to, or ensure equal treatment of Guyanese nationals and companies.
It is unclear what will be the role of the current Centre for Local Business Development as companies that are not registered with the Local Content secretariat will not be considered by oil companies or the government.
Before contractors, sub-contractors, or licensees set up here, they will have to submit to the Minister a Local Content Master Plan which must include an Employment Sub-Plan, Procurement Sub-Plan and Capacity Development Sub-Plan.
In addition, they will have to file a Procurement Sub-Plan that must include a supply chain management strategy, a forecast of required goods and services; identification of the goods and services to be procured from qualified Guyanese nationals and Guyanese companies; provision of Guyanese nationals or Guyanese companies with timely and appropriate access to information, business opportunities, joint ventures and partnership opportunities, technology and know-how, procurement systems and procedures suited to the scale and capacity of the local market, contract and payment terms that facilitate competitive financing and growth; and performance management systems and procedures, with feedback and support for improvement, the Bill states.
The Secretariat will develop and maintain a local content register of qualified Guyanese nationals and companies and recommend for approval or refusal, master and annual plans submitted.
A Director of the Secretariat will be appointed by the minister and other members can also be chosen by the minister if they meet the requisite experience, qualification and capacity to perform the duties set out.
Those duties will be to ensure that contractors meet the 45-day