Pres. Ali to hold national consultations on Local Content Act next year – Min. Bharrat

President Dr Irfaan Ali is expected to hold national consultations with stakeholders early next year on amendments to the Local Content Act, Minister of Natural Resources Vickram Bharrat announced on Friday.

Speaking during a ceremony to announce the launch of another edition the Guyana Energy Expo and Supply Chain Conference, Minister Bharrat acknowledged that there continues to be calls from the private sector for the government to relook at the legislation.

“Re-look at Schedule 1 of the local content legislation so that we can involve more businesses, so that we can increase the services that are there in Schedule 1. I’m happy to say that we would have started that process. [Head Michael Munroe] from the Local Content Secretariat would have written to most of the stakeholders, including the chambers, business chambers and interested parties to make submissions to us. We have received a lot of submissions. We are now in the stage of compiling that and also to look at the loopholes that exist in the existing legislation and to see how we can strengthen the legislation basically so that there is no avenue for people trying to, for example, fronting or setting up or establishing shell companies as we would have found a few in the past. So that is in process right now,” the Natural Resources Minister explained.

“Sometime early in the new year, His Excellency is committed to holding consultation with all stakeholders present so that we can have the views, share the views of everyone and therefore to ensure that we redraft or amend and to add or to change targets in Schedule 1 of the local content legislation thereby bringing more benefits to Guyana and Guyanese businesses,” Minister Bharrat added.

The Local Content Act currently outlines 40 different service areas that oil and gas companies and their subcontractors must procure from Guyanese and Guyanese-owned companies.

These include 90 per cent of office space rental and accommodation services; 90 per cent of janitorial services, laundry and catering services; 95 per cent pest control services; 100 per cent local insurance services; 75 per cent local supply of food; and 90 per cent local accounting services.

But stakeholders have been calling for these areas to be expanded and for more services to be added, especially as local capacity grows. The Local Content Act was enacted in 2021.

According to Minister Bharrat, “you would imagine that from then to now, we would have built a lot of capacity in-country”.

“We have seen a lot of investment coming into Guyana in different areas, different services that are required for the oil and gas sector. So, I think next year will be the right time for us to do a reassessment of the capacity that we have built over the last years and to add that to the Local Content Legislation Schedule 1 and basically to look at some of those targets that are set for the 40 services and to make some adjustments whether upwards or downwards as the case may be,” he noted.

In an invited comment, Minister Bharrat told this publication that an area that could possibly see increased local participation is the medical services sector. “Medical services is 25%…but we have built so much capacity over the last few years that I am confident that our medical and health institutions in Guyana – both public and private – have the capacity to offer more than 25%,” he said, noting that there are other areas that could see increased participation such as welding and fabrication, and catering.

“Those are obviously areas where we would have to adjust the targets to offer more opportunities to Guyanese and Guyanese businesses,” he explained.

Meanwhile, Minister Bharrat noted that the legislation has enabled about 1300 local businesses to partake in the oil and gas sector, noting that “otherwise, in many other countries, they would have just been onlookers, bystanders or awaiting just revenue that flows into the government to derive benefits from”.

“But today they are directly benefiting from the oil and gas sector,” he posited.

In addition, he noted that because of the Local Content Act, there are about 7000 Guyanese employed in the sector while another 3000 are indirectly employed.

“That is quite an achievement for a very short period of time,” the Natural Resources Minister remarked.

Nevertheless, he reaffirmed that the law is in no way intended to keep out foreign investment, noting that “we cannot develop the sector without partners”.

“That is the bottom line. There is no way Guyana could have developed the oil and gas sector to where it is today without our partners and without investment coming into our country. So, it was never meant to keep out investors or investment in the sector in our country but it was only meant to include Guyanese and Guyanese businesses in the entire ecosystem of the oil and gas sector and I think we have quite successfully done that to date and obviously we are going to move ahead to work on bringing further benefits for Guyanese businesses,” the minister expressed.