Companies involved in contract bundling could be fined $50M – Local Content Secretariat

The Local Content Secretariat (LCS) has warned that it is cracking down on companies who still engage in contract bundling, including denying them the compliance certificate they need to avoid a $50 million fine.
Contract bundling, the practice of companies tendering for contracts in a way that excludes small and medium-sized companies, has been a topical issue for some time. In a recent statement, the Local Content Secretariat clarified what it has been doing about the issue.

For one, it was explained that they continue to have conversations with stakeholders, on issues such as contract bundling and lengthy payment periods. An August 16 meeting, for instance, resulted in a general agreement to push for contracts to be unbundled and a thirty-day payment period for small and medium-sized businesses.
That meeting, between Natural Resources Minister Vickram Bharrat, also saw the Private Sector Commission’s Local Content Advisory Committee (LCAG) in attendance. The very next day, the secretariat also issued a warning to companies, of the consequences if they continue to bundle contracts.
“The Government of Guyana, through the Ministry of Natural Resources, continues to dialogue with all stakeholders of Guyana’s petroleum sector, including the private sector. Such dialogue is aimed at ensuring that the goals of the Local Content Act are achieved to ensure Guyanese reap the benefits of this lucrative and rapidly expanding sector.
“Among the multitude of issues discussed, specific emphasis was placed on the bundling of contracts and lengthy payment periods. There was a general agreement to continue pushing for the unbundling of contracts as well as examining a thirty-day payment period for small and medium-sized businesses.”
The secretariat warned that bundled contracts will not be measured as compliance, especially if these contracts were awarded after the Local Content Act came into force. This means companies failing to achieve their minimum local content level, as measured in Section 7(1) of the Act, will not be awarded a certificate of compliance.

“By failing to achieve the minimum local content levels, the Contractor or Sub-Contractor will not be awarded the Certificate of Compliance by the Secretariat at the end of the calendar year,” the secretariat said.
“Without a Certificate of Compliance, it means that the Contractor or Sub-Contractor has failed to carry out petroleum operations without the minimum local content requirement, thereby committing an offence.”
Companies failing to reach minimum local content requirements in the oil sector are liable to a $50 million fine. Persons like Georgetown Chamber of Commerce and Industry (GCCI) President Timothy Tucker have been at the forefront of the fight against contract bundling.
It has previously been disclosed that despite the Local Content Act, oil and gas companies continue to come up with new ways to bypass the law. President Dr Irfaan Ali has previously said that his Government has to continuously review the local content legislation to address the loopholes that foreign companies use to manipulate the systems in place to ensure that Guyanese benefit from the oil and gas sector.
According to Vice President Bharrat Jagdeo, one of the schemes that companies have been using is to manipulate their junior Guyanese staff to fill up the legally-mandated quota for senior management staff, all while the junior staff continue to collect their original salaries.
Asked previously about how his Government intends to deal with violators of the Local Content Act, President Ali had told <<<Guyana Times>>> that there are several ways to crack down on such manipulative acts. He had hinted at the possibility of further strengthening the local content legislation to clamp down on such loopholes.
“There is a continuous analysis of the laws. We are young in this, we have just passed the local content legislation, so they will be continuously reviewed. There will be continuous analysis to deal with loopholes and to deal with areas in which people think they can manipulate,” the President had indicated.
Guyana passed its local content laws in December 2021, and those detail a series of measures geared towards ensuring that Guyanese and locally-owned businesses benefit from the oil and gas sector.