Local Content Bill is a living document – Natural Resources Minister tells National Assembly
As the debate kicked-off in the National Assembly on the Local Content Bill, Minister of Natural Resources, Vickram Bharrat, M.P., promulgated that this document is a “living one”; one that embodies the views of all stakeholders. The Minister highlighted this in the 34th Sitting on Wednesday.
The Local Content Bill lays out 40 different services that oil and gas companies and their subcontractors must procure from Guyanese companies by the end of 2022. For instance, these companies must procure from Guyanese companies, 90% of office space rental and accommodation services; 90% janitorial services, laundry and catering services; 95% pest control services; 100% local insurance services; 75% local supply of food; and 90% local accounting services. These are just a few of the services highlighted in the first schedule in the Local Content Bill.
The Minister was quick to note that as the capacity of Guyanese expands, so will the services in the local content legislation.
“It is a working and living document,” Minister Bharrat said. “Nothing in the local content bill is cast in stone. The Local Content Bill will help us to understand the day-to- day operations of the oil and gas sector, and what certification is needed for our people.
We had to base our schedule on the number of consultations we had with the international oil companies, sub-contractors, the private sector and civil society… The schedule is based purely on consultations.”
These consultations lasted an entire year and guidance and support were even sought from other oil and gas producing states such as Ghana, Norway, Trinidad and Tobago, as well as local content experts.
As part of the Local Content Bill, the government is proposing the establishment of two local content registers. These registers will comprise Guyanese companies that supply goods, and secondly, employment services. Notably, these registers are to be developed and maintained by the Local Content Secretariat. This body is also proposed in the Bill.
In his presentation, the Natural Resources Minister spoke at length about the contents of the Local Content Bill. He reminded that in the document, the government has clearly defined what is a Guyanese company and who is a Guyanese national. This is to prevent foreigners from disguising as locals.
As it relates to the definition of a Guyanese company, he outlined Guyanese must own 51% voting rights and shares in the company. Further, Guyanese must hold 75% executive and senior management positions, and at least 90% of non-managerial and other positions, as detailed in the Bill.
“We don’t want to encourage fronting,” Minister Bharrat asserted. “We don’t want to encourage that because we have seen models around the world where locals would just act as a front for the foreign companies. We don’t want that. That is not the intention of a Local Content Bill. That will not bring benefits to Guyanese.”
Importantly, the Natural Resources Minister was quick to point out that the Bill proposes penalties for oil and gas companies and their sub-contractors who fail to meet the minimum targets of the legislation, as well as those who are in breach of the Act. These fines range from as low as $5 million to as high as $50 million.
Meanwhile, Shadow Oil and Gas Minister, Opposition member, David Patterson, commended the government and the Natural Resources Minister for bringing the Local Content Bill to the National Assembly.
“Local content governance is much needed,” Patterson said, “and gives Guyanese companies the opportunities to activate and benefit from the oil and gas sector.”
The PPP/C Government is looking to pass this hallmark Bill before the new year.