The Local Content Secretariat has no vetting powers

Jun 25, 2022 Features / Columnists, Peeping Tom

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Kaieteur News – The Georgetown Chamber of Commerce and Industry (GCCI) is out of order … again. Its latest snafu is contained in a statement, which it issued a few days ago.
In that statement, the GCCI cautioned against the practice of fronting – in which some companies use front men to satisfy the letter of the law in relation to the 51 percent local ownership for companies to be considered as a Guyanese company.
According to a Demerara Waves Report, the GCCI called on the Local Content Secretariat, established under the Local Content Act, to examine the ‘beneficial ownership’ of enterprises seeking to obtain Local Content Certificates. The GCCI recommends that the ‘burden of proof’ regarding beneficial ownership lie with the enterprise seeking to apply for the Certificate.
The fact that the GCCI makes such a recommendation suggests that it realises that, under the present Act, the burden of proof at present does not reside with the applicant for a Local Content Certificate.
The GCCI also urged that the Local Content Secretariat vet firms applying for a local content certification. Unfortunately, the Local Content Secretariat has no powers to vet or verify that an application for a Local Content Certificate is a Guyanese company as defined by the Local Content Act.
The Local Content Act is deficient. In its mad haste to rush legislation through the National Assembly, the PPP/C government failed to empower the Local Content Secretariat to vet and validate that applicants for local content certificates are in compliance with the definition of a Guyanese company under the Act.
The powers of the Local Content Secretariat can be summarised as follows: to develop and maintain measures for the effective implementation of local content by contractors, sub-contractors and licensees [my emphasis]; and to develop strategies to prioritise preference or equal treatment to Guyanese companies.
The Local Content Secretariat also required to conduct market analyses; make recommendations to the Minister; to develop plans and formats for local content reporting [by the oil companies, their sub-contractors and licensees]; and to measure the local content performance of the aforementioned.
Under the existing Local Content Act, a company applying for a Local Content Certificate is not required to establish majority beneficial local ownership by locals or the other criteria set out for Guyanese companies. There is nothing in the law which grants, to the Local Content Secretariat, powers to verify that a company applying for a Local Content Certificate, is 51 percent owned by a Guyanese national or nationals or that 75 percent of its management and 90 percent of its workforce are Guyanese.
All that a company, applying for a certificate or which is already certified, has to do is to inform the Secretariat of changes to its ownership and management. But here again, it only has to do so if these changes place it in contravention of the definition of Guyanese companies.
The Local Content Secretariat’s powers of monitoring reviewing and assessing relate to the local content performance of and reports submitted by the oil companies, their sub-contractors and licensees. In fact, almost all of the powers of the Local Content Secretariat relate to the procuring entities.
The Local Content Secretariat should point out which provision or provisions of the Local Content Act grants it powers to vet whether an applicant has majority beneficial local ownership as opposed to having front persons and companies. The powers of the Local Content Secretariat are circumscribed by the Act and do not confer powers of vetting or validating the ownership and management structure of local companies.
The Secretariat powers over Guyanese companies relate to the fact that unless they are certified, their supply of goods and services is not measured in the local content targets set. In effect, this means that unless the companies are in the Local Content Register, they can be treated as a foreign company for the purposes of measuring the local content performance of the oil companies, their sub-contractors or licensees.
Indeed the Act places the greatest onus on the oil companies, its sub-contractors and licensees. It is these entities, which are required “to implement local content as an essential component of their petroleum operation.”
The Local Content Act lacks teeth. It is deficient. And the Local Content Secretariat cannot act outside of its lawful remit in compensating for the Act’s deficiencies, regardless of what the Georgetown Chamber of Commerce and Industry feels.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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