Draft Local Content Bill/compliance: Law allows operators, sub-contractors 1-year grace period – Nandlall
…before full force brought against them
Attorney General Anil Nandlall, SC, has revealed that with the law allowing a one-year grace period, operators and sub-contractors in the oil and gas sector in Guyana would be allowed some time before they need to be fully compliant with the Local Content Act, once passed.
He made these comments during a recent interview with the State media, explaining that at present there may not be operators who are compliant and the law recognises the need for a transitionary period.
“Significantly, the law allows an entire year and recognises existing operations. So, in other words, it’s not as soon as the law passes, it means that all contracts with existing operators will terminate, because remember, they may not satisfy the Act,” Nandlall explained.
“The law recognises all of that, and allows for transitionary periods as the case may be for existing contractual arrangements not to be affected and to be executed in accordance with pending contracts. But a long period of one year is given for one to get one’s self in order for the Act to apply.”
Once enforcement begins, oil companies will have a hard time ignoring the provisions in the recently-laid Local Content legislation, since sections of the bill propose up to $50 million in penalties for oil companies and sub-contractors who flout its requirements.
The bill has a number of requirements, including requirements for companies to submit local content plans and data on their local content inclusionary efforts. Additionally, in the rare cases where companies have to source labour or supplies outside of the local content provisions, companies must submit evidence of this need.
Issuance of information that is false or misleading is an offence under the bill that can attract a $10 million (US$50,000) fine upon summary conviction. Failure to submit the aforementioned local content plans or records under the Act also opens companies up to the possibility of a $5 million fine.
Meanwhile, Guyanese nationals who aid and abet oil companies in breaking the Local Content regulations are also liable to a fine of $5 million in the case of individuals, and up to $10 million in fines in the case of a body corporate.
Following the recent tabling of the bill, it has attracted praise from a number of Private Sector organisations, including the Private Sector Commission (PSC); the Guyana Oil and Gas Energy Chamber (GOGEC) and the Georgetown Chamber of Commerce and Industry (GCCI).
The PSC, which is the umbrella representative of the entire Private Sector, extended congratulations to the Government following the laying of the bill and expressed confidence that the legislation would go a far way in developing the capacity of local companies by allowing them to meaningfully participate in the oil and gas sector.
The organisation had also urged local businesses to prepare themselves and develop in a way that would allow them to take full advantage of the legislation. In the same vein, the PSC also committed to working with the Natural Resources Ministry and the Government to maximise the effectiveness of the legislation.
Among the proposals in the bill is the requirement for foreign companies to engage Guyanese and Guyanese-owned businesses at specified and varying levels in at least 40 areas by the end of 2022.
These include 100 per cent exclusive use of Guyanese companies in the provision of immigration support services, work permits, visa applications, visa on arrival, in-water activity permit, custom brokerage services, and ground transportation.
According to the document, this is to ensure “maximum participation of Guyanese nationals and Guyanese companies supplying goods or providing services in the Guyanese petroleum sector; and local capacity development”. (G3)