Foreign companies will have to exit sectors reserved for locals when local content law is passed

May 23, 2021 News

…but unable to give timeline for legislation — VP Bharrat Jagdeo

“…they would have to do something else, if they are here and this is for Local Content and you are not a local, you would have to disengage; oil companies will have to disengage and make sure Guyanese are involved,” – VP Bharrat Jagdeo

By Gary Eleazar

Kaieteur News – Foreign companies currently supporting petroleum operations in Guyana but which are providing services that would be earmarked for Guyanese under the proposed local content laws, will have to disengage their services when such legislation comes in force, says Vice President Bharrat Jagdeo. Further, the oil companies operating in country would have to ensure that Guyanese companies are then involved.

VP Bharrat Jagdeo engages members of the media following the press briefing at ACCC on Friday.

VP Jagdeo, set out this policy on Friday, during a press conference where he reminded the media that government is currently exploring legislation to protect Guyanese businesses in the oil and gas sector. This, he said, is in order to provide guarantees that some categories of jobs would not be given to foreign companies.
Additionally, the Vice President related that the new law would seek to define Guyanese ownership to ensure local companies are not just used as shell companies for foreign interests.
During the press engagement, held at the Arthur Chung Convention Centre (ACCC), Jagdeo related hearing tales that Guyanese businesses are unable to compete in the industry. Adamant that Guyanese companies can do any of the technical support services such as logistics, the Vice President said that when the proposed local content legislation becomes law, foreign companies engaged in the types of services that would be reserved for Guyanese would have to disengage from whichever oil company they are working with.
He told reporters, “…they would have to do something else, if they are here and this is for local content and you are not a local, you would have to disengage.”
The Vice President related too, that at that time, the oil companies would also have to disengage their business relationships with those foreign companies and to ensure Guyanese are involved. Jagdeo told media operatives that the proposed legislation would, as a result, see tens of billions in earnings being carved out for locals.
He also indicated that there are currently several areas in the proposed law still to be fleshed out, such as the issue of naturalisation. The Vice President explained that this scenario presents a tricky situation, since a foreigner is naturalised using the laws of Guyana and that naturalised Guyanese are afforded the rights of a Guyanese citizen.
Jagdeo noted too that the proportion of ownership for companies would have to be addressed and said government is exploring whether to have the criteria be set at 100 percent owned by Guyanese or a 75/25 ratio, among other variations for an ownership structure. The Vice President qualified his position saying, government would also want to have local companies benefit from capital and other technological inputs from the foreign companies looking to partner.
He was unable, at the time however, to pronounce on a timeline for when the proposed law would be effected as substantive legislation. According to Jagdeo, in addition to laws providing for certain goods and services to be sourced exclusively by Guyanese, the administration is also looking to guarantee a percentage of other sectors, in similar vein. The identified categories to be reserved for Guyanese so far, according to the Vice President, include areas like landscaping, cleaning, food supplies, logistics and transportation services among others, such as rentals.

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