Govt. must look out for anti-competitive practices, abuse of legal loopholes by oil companies

Oct 21, 2022 News

– New York based lawyer warns

Kaieteur News – While Guyana’s Local Content Legislation must be commended for its pursuit to increase the involvement of Guyanese in the oil sector, New York-based Attorney-at-Law, Dr. Vivian Williams is urging regulators to be wary of companies that would engage in various forms of anti-competitive behaviour and creative compliance with the law.

The lawyer said such practices that may seek to exploit legal loopholes, undermine the spirit and intent of the legislation which seeks to maximize the use of local goods and services in the oil sector.

Importantly, Dr. Williams said authorities must ensure fool-proof systems are in place to detect when companies are employing methods that ostracize Guyanese. He said this is done through varying procurement schemes where the standards or requirements are set in such a way that it benefits certain companies alone. On the extreme end, such practices can even force companies to close shop.

As to the merits of the law, he said one has to be mindful that it does not create pockets of monopolies. Dr. Williams said if there are only a small number of companies that are certified to be used in one particular business area such as welding then that can drive up costs.

Given Guyana’s current labour shortage, he explained that there will also be a need for flexibility on what constitutes a Guyanese company.

Guyana’s Local Content Legislation has three main criteria which a company must satisfy in order to qualify as being “Guyanese.” It must first be incorporated under the Companies Act and be beneficially owned by Guyanese nationals who have 51 percent of the total issued shares of the company. Secondly, Guyanese nationals must hold at least 75 percent of the Executive and senior positions; and thirdly, at least 90 percent of the non-managerial staff must be taken up by locals.

Dr. Williams said companies may not be able to reach such strict targets as such; flexibility would be required by the Local Content Secretariat. He said rigid adherence could lead, in some cases, to there being just a few players operating in certain categories of work.

Dr. Williams said it is imperative also that Guyana is mindful of the implementation of the law for if it is done effectively, it can unleash significant benefits for citizens.

Speaking to other noteworthy aspects of the law, Dr. Williams said the simplicity of the law aligns with the best interest of the country since complex pieces of legislation open the floodgates for abuse on the grounds of misinterpretation and uncertainty. “So simplicity is one of the strengths of the law,” the lawyer said.

Furthermore, Dr. Williams said the provisions of the law which speak to reporting and regulation of bidding is also praiseworthy. He said the law demands that oil companies have an open bidding process. It also regulates the idea of sole sourcing and when competitive bidding is utilized. With so much economic promise floating around, he said it is imperative that regulations on how contracts are being allocated. “This sort of openness must not only be restricted to oil companies but something that envelopes the entire country and become a practice, a culture. This aspect of the law also indicates the desire for equality in terms of economic offers,” expressed Dr. Williams.

In closing, Dr. Williams said it is important for societal actors to understand that Guyana is still a new oil producing State, as such, it will make mistakes.

He said, “All countries do. Even the great economic powers of the world are guilty of this. But the important thing is how we make room for improvement. Would the powers that be make room for input and have the courage and confidence to correct their missteps?”That he said will be answered with time, adding that the course Guyana takes will ultimately decide its progression with local content.