Recognising that within Guyana’s burgeoning oil and gas industry there may be companies operating in defiance of local content stipulations, the Local Content Secretariat (LCS) has embarked on an initiative aimed at identifying, penalising, and in some cases helping, those firms.
LCS Director Martin Pertab said that the exercise commenced this week, and, so far, one company has been visited by the Secretariat’s Compliance Unit, which is currently staffed with four personnel.
Pertab assured that, where applicable, defaulting companies would be penalised via fines, as outlined in the Local Content Act, and in some cases, the LCS would work with them to bring them up to compliance.
The LCS Compliance Unit is, among other things, aiming to find firms that are failing or struggling to implement their Local Annual Content Plans, or local firms that are “fronting” for foreign entities.
For example, Pertab noted that, upon applying for their Local Content Certificate, some companies may prove that they have the required staff ratio, but would subsequently default on this. To qualify as a local company, a firm must be 51 per cent owned by a Guyanese national, while its management team must comprise 75 per cent Guyanese. Additionally, its overall staff complement must be 90 per cent locals.
According to Pertab, during the site visits, the Compliance Unit would want to see “evidence that Guyanese are actually making the decisions…”
He also noted that “if there is any change to the ratio, and they don’t inform us, then they’re in breach of the Local Content Law.”
He warned that there are in place provisions by which defaulting companies can be fined.
On the other hand, he said companies that are experiencing challenges in implementing their Local Content Annual Plans would receive support in reaching their targets. “We wanna work closely with them to help ensure compliance. That’s the idea behind us having these site visits,” Pertab said.
The Local Content Act states that contractors, sub-contractors and licensees operating in Guyana’s petroleum sector must submit a Local Content Annual Plan, outlining in detail their procurement, employment, and capacity development plans for the reporting year.
Meanwhile, there are over 800 companies that have been issued with a Local Content Certificate, and Pertab has admitted that the Unit would not be able to visit all of them. For this year, the goal is to target the Tier One companies, which amount to about 30. He said the Unit would be targeting companies that have a sizeable number of contracts, and those where joint ventures are in place.
The ultimate goal of the initiative, Pertab emphasised, is to “tackle rent-seeking, and ensure that the information submitted to the Secretariat by businesses and companies is accurate and a true reflection of the beneficial ownership, management, and employment structure of the entity.”
