Private Sector wants some Local Content targets revised

Dec 19, 2021 News

…calls for supportive institutional framework

Kaieteur News – The Private Sector Commission (PSC) in congratulating the Government on the tabling of the Local Content Legislation and in welcoming the new law, has noted as example, “while the legislation caters to a number of specific areas, the percentages in some areas, we believe, require some revision.”
Notwithstanding, the PSC in a public statement yesterday outlining its position on the new law said “we are of the firm belief that the legislation will serve to develop our local companies by affording them the opportunity to meaningfully participate in the Oil and Gas sector.”

The Private Sector wants some Local Content targets revised.

According to the PSC, the need for this legislation has been advocated by the Commission for a number of years and we see its “tabling and passage as a fundamental step in fostering the growth of many local businesses and advancing Guyana’s national development. We look to many businesses, both manufacturing and services quickly embracing the opportunities that the legislation opens up.”
According to the private sector representative body, it expects that with effective implementation and monitoring, the required changes will be instituted. We encourage all local businesses to get prepared and develop themselves to take full advantage of this legislation. The entity, nonetheless, said it commits to working with the Ministry of Natural Resources and by extension the Government of Guyana in realising maximum benefits from “our” National Local Content Legislation.
Meanwhile, the Georgetown Chamber of Commerce and Industry (GCCI), in welcoming the Bill tabled this past week, said it retains its view, in a steadfast manner, that Local Content will facilitate material benefit to the Guyanese private sector.
For its part, it reminded that the Chamber has undertaken an expansive range of activities which it viewed as being necessary to aid in the general public’s understanding of local content, including but not limited to forums, seminars, webinars, policy briefs, extensive commentary, advocacy, crafting of a model legislation and consultation sessions. As such, it said the Business Support body, reinforces that the Local Content Bill being tabled is representative of a gold standard instrument in supporting private sector development.
The GCCI has actively participated in the consultations with the Government of Guyana and in welcoming the legislation, said it is especially pleased at the Bill’s establishment of two key institutions – the Local Content Secretariat and the Inter-Agency Advisory Committee.
“These two institutions engender the dynamism which such a Bill ought to encapsulate. This will ensure that the private sector continues to benefit from this legislation long into the future.”
To this end, the Chamber of Commerce said it now anticipates further improvements and reforms to both the institutional and legislative framework necessary to support the country’s development including the establishment of the Petroleum Commission.
Some of Guyana’s proposed Local Content measures now enshrined in law had been criticised by some international experts as being ‘unrealistic’ and a perusal of the first schedule of the draft bill would see the assumption appearing to bear true, since it demands and reserves for Guyanese, the supply of several types of materials currently not produced in Guyana.
Table four of the Bill’s Schedule outlines that the supply of Steel Plates, Flat Sheets, Sections, Steel Pipes, Low Voltage Cables, High Voltage Cables all to be supplied 100 percent by Guyanese companies in 10 years’ time.
Guyana produces none of the items reserved as materials to be procured exclusively by Guyanese.
According to the draft schedule, other demands being reserved for Guyanese to supply up to 95 percent, include the supply of valves and pumps, drilling mud-baryte, bentonite, cement, heat exchangers and other piping accessories, steel ropes and other mooring accessories, protective paints and Glass Reinforced Epoxy (GRE) pipe.
Additionally, when it comes to legal services, all legislative drafting for the sector has been reserved for Guyanese from day one as well as Legal Consultancies.
The proposal does allow for a sliding scale at the lower end of between 50 and 60 percent to, at the end of 10 years, 95 percent of in-house legal work as well as legal advisory services being supplied exclusively by Guyanese.
Another red flag in the proposed legislation is the fact that reserved 100 percent for Guyanese relates to Accounting Services.
These include, tax return preparation, payroll support, accounting support, tax advisory accounting and finance employment. With the exception of Financial Advisory service, which in 10 years is reserved at 95 percent for Guyanese, each of the other slots are to be supplied exclusively by Guyanese.
Notably, on the administrative side of things, Management Staff has only been reserved at 45 percent for Guyanese, while supervisory staffing positions at the end of 10 years should be provided by a 65 percent local workforce.
Technical and professional support staff have been capped at 80 and 90 percent respectively while all of the semi-skilled and unskilled administrative labour will be reserved for Guyanese throughout.
Other services that see high expectations on the part of the ratio of work to be provided for by Guyanese include Front End Engineering and Design (FEED), Detailed Engineering and other services.
These positions, as contemplated by the proposed bill, are to be reserved by as much as 90 percent for Guyanese.
Fabrication, Construction and Storage also accounts for a high supply of Guyanese input between 80 and 100 percent, in addition to transportation, supply, and disposal services.
The first schedule did point out, “Given that some services such as well cementing services, ROVs, directional drilling services, tools and wireline logging are currently being implemented by International Tier 1 Contractors, Guyana is moving towards an encouragement of more joint ventures and partnerships through technological adaptation and skills transfer.”
This, the draft bill said “would allow for our local labour force and businesses to better participate in the provision of these services.”