Local Content Bill Passed in National Assembly to Give Locals Piece of Oil and Gas Sector Pie

GEORGETOWN, Guyana – Ground-breaking legislation to assure Guyanese and local companies of contracts in the multi-billion-dollar oil and gas sector was passed in the National Assembly on Wednesday after more than seven hours of debate and government agreeing to several amendments proposed by the Opposition.

BHvickMinister of Natural Resources Vickram BharratThe 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, including 90 per cent of office space rental and accommodation services; 90 per cent of janitorial services, laundry and catering services; 95 per cent of pest control services; 100 per cent of local insurance services; 75 per cent of local supply of food; and 90 per cent of local accounting services.

“That is the length we went to ensure our Guyanese brothers and sisters are beneficiaries in the oil and gas sector,” said Minister of Natural Resources Vickram Bharrat who introduced the legislation.

The Bill also outlines 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 legislation. These fines range from GYD$5 million (USD$24,036) to GYD$50 million (USD$240,366).

The Local Content Bill was passed despite several attempts to stall its passage earlier in the day by the main opposition A Partnership for National Unity + Alliance For Change (APNU+AFC) and other groups, including a minor protest by a small number of opposition supporters outside of the Arthur Chung Conference Centre.

The government said the Opposition was a no-show for a Wednesday morning meeting set up to consult on further recommendations before debate on the Bill. However, it had submitted 14 proposed amendments in writing on Tuesday and Bharrat said the government had agreed to 10 of those amendments.

The accepted amendments include changing the name of the Inter-Agency Committee to Local Content Oversight Committee and allowing an Opposition Member of Parliament to sit on that body which will be tasked with ensuring the monitoring of local content commitments.

Other amendments include: the publishing of the Local Content Secretariat on the website of the ministry responsible for petroleum or any other media in wide circulation on the Local Content Register, which shall be updated quarterly; that a contractor, sub-contractor or licensee without the written permission of the minister acting on the advice of the Secretariat and the Local Content Oversight Committee, shall not enter into any contract in excess of three years; the choosing of members from 10 different local agencies, including the National Toshaos Council, Transparency International Guyana Incorporated, and the Guyana Bar Association, for the Committee.

Although saying there should have been more discussions on some of the contents of the Bill, the opposition’s Shadow Oil and Gas Minister David Patterson commended the government and the Natural Resources Minister for bringing it to the National Assembly.

“Local content governance is much needed and gives Guyanese companies the opportunities to activate and benefit from the oil and gas sector,” he said.

The Opposition had proposed the changing of the Local Content Bill’s definition of a Guyanese national to mean a citizen of Guyana by birth. However, Minister Bharrat said the government disapproved of that proposal.

Attorney General and Minister of Legal Affairs, Anil Nandlall added that it would be “highly discriminatory” and “myopic”.

“That is only one aspect, one way in which you get citizenship. You have citizenship by marriage, citizenship by naturalization, you have citizenship by descent,” Nandlall said.

In his presentation, Minister Bharrat reminded that the legislation clearly defined what is a Guyanese company and who is a Guyanese national to prevent foreigners from disguising as locals to benefit from procurement.

The definition of a Guyanese company is one in which a Guyanese owns at least 51 per cent voting rights and shares in the company. Further, Guyanese must hold 75 per cent of executive and senior management positions, and at least 90 per cent of non-managerial and other positions.

“We don’t want to encourage fronting. 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,” the Natural Resources Minister said.

He said consultations on the legislation lasted a year, and guidance and support had been sought from other oil and gas producing states such as Ghana, Norway, and Trinidad and Tobago, as well as local content experts.

“We have spent over a year consulting with various groups across the country, especially the private sector, the operators, and civil society. The Local Content Bill that is presented to the National Assembly is a Bill that represents the views of all those who were consulted. It is a working document. It is a living document. No Local Content Bill can remain static in any country in the world. Nothing in the Local Content Bill is cast in stone because as we continue to assess our capabilities and capacity, we will have to change targets and make changes to the schedule,” Minister Bharrat said.