Local Content Secretariat commences revision of legislation to close loopholes for corruption

Feb 16, 2023 News

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– to issue 750 certificates for 2023; expand categories of work to earn additional US$250M 

By Kiana Wilburg 

Kaieteur News – Head of the Local Content Secretariat, Dr. Martin Pertab disclosed yesterday at the ongoing International Energy Conference- Guyana 2023, that a number of initiatives are planned this year to not only remove opportunities for abuse by schemers but also increase the number of local companies that can participate in the oil industry.

Towards this end, Dr. Pertab said the secretariat intends to issue around 750 Local Content Certificates this year, adding that the process to revise the Local Content Act has commenced.

Dr. Pertab said the strengthening of the law is intended to close all potential loopholes for corrupt behaviour and further prioritise the use of Guyanese suppliers in the sector.

Specifically, Dr. Pertab said, “We are reviewing all existing targets under the first schedule of the Act. Based on our engagements with the private sector and other stakeholders, and engagement with local companies over the last year, we are confident that locals are now capable of providing a larger share of the identified services.”

Expounding on this front, Dr. Pertab said the secretariat has seen significant increases in the capacity of locals to provide medical services, environmental services and studies, hazardous waste management, pipe welding, and ship and rig chandlery services. He said one can therefore expect to see these areas undergoing significant increases in their respective targets in the law. In other words, foreign entities will be forced to increase their use of Guyanese for these services.

As it relates to the First Schedule of the Act, Dr. Pertab said this outlines 40 categories where foreign entities must use locals to varying degrees. These include the areas of marketing, catering, accounting, transportation and immigration services.

He said, “We have identified several new carved-out areas. Based on preliminary assessments, these areas will bring in an additional US$150 to US$200 million in business opportunities. One of the criteria used to add these areas is proven in-country capacity. Therefore, areas such as lab supplies, rope access services, offshore pipe coating, vessel chartering, etc. will likely find their way onto the First Schedule of the Act.”

Dr. Pertab also noted that the government will be collaborating with the Government Technical Institute (GTI) and some of the major subcontractors operating in the oil and gas industry to provide paid internships to 40+ students. Once completed, Kaieteur News understands that students will be given an opportunity to join the workforce of these companies. He explained that the aim is to take a proactive approach towards possible labour shortages in the oil and gas industry. During the course of the year, Dr. Pertab said the secretariat will also engage other technical institutions. He said too that secretariat officials will also host public workshops with Guyanese and Guyanese-owned businesses. Dr. Pertab said these workshops will go hand-in-hand with an intense communications campaign.

The Director said these exercises will be critical so that more companies and citizens by extension can be better informed about the pro-business nature of the legislation. As a result of the ground work already started, the Director said there are several joint ventures with foreign companies in the making for the provision of sophisticated fabrication services, vessel supply services, and offshore pipe coating. He said too that talks are also ongoing with a local and foreign company to provide surveys, sub-sea inspection, repair and maintenance (IRM), Remotely Operated Underwater Vehicles (ROV) and ROV tooling etc.

He said this will no doubt build on key achievements last year, adding that the 40 carved-out areas for Guyanese companies brought in around US$700 million in additional business.

Speaking to other notable accomplishments, the Director said progress has been made in reducing the payment period by foreign companies to locals to 30-45 days. To ensure that commitment remains by the contractor, sub-contractors and licensees, Dr. Pertab said they are required to include it in this year’s annual plan before approval is granted.

In addition to having 560 companies registered last year, he said the secretariat also addressed the issue of bundling of services. He said, “We have made it clear, that if services are bundled, the secretariat would not recognise those expenditures as local content.  Furthermore, unbundling of services is one of the requirements on which local content plans are approved. Therefore, any acts of bundling would be in violation of the local content plan.”

Guyana’s Local Content Secretariat came into being last year, following the enactment of the Local Content Act. Its core functions include implementing the Local Content Act which speaks to the prioritisation of Guyanese nationals and companies in the provision of goods and services to the oil and gas industry; ensuring local capacity development and building; and promoting competitiveness and the development of related industries to sustain the socio-economic development of Guyana.

Throughout last year, the secretariat has worked vigorously to develop the necessary institutional, administrative and monitoring framework to help facilitate the implementation and monitoring of the Local Content Act. Specifically, it has developed a portal that shows the list of all registered companies, along with procurement and employment opportunities in the oil and gas sector. To help facilitate compliance with reporting, the secretariat has also developed several guidelines, while ensuring that Guyanese nationals and Guyanese companies are prioritized in the supply of goods and services.

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• corruption, Dr. Martin Pertab, legislation, Local Content Secretariat, loopholes

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