Govt warns int’l companies against using loopholes to skirt local content commitment

…says yearly assessments of companies will be done; defaulters will face the law

Natural Resources Minister Vickram Bharrat has issued a warning to those foreign companies who have not been fulfilling their local content commitments, whether through late payments or even using loopholes to not hire Guyanese.

During a consultation with suppliers on Tuesday, Bharrat recounted the various ways foreign companies try to skirt the law. Some of them, he said, use manpower agencies to hire staff. This is often used to cut corners and avoid reporting on local content.
A local company is defined in the Local Content Policy as one that is at least 50 per cent Guyanese owned, with 75 per cent of the managerial staff and 90 per cent of the total staff also being Guyanese. By using manpower agencies, however, they have been trying to get around this.
“What we’ve been seeing recently, is companies going through manpower agencies. Now we don’t have a problem with that, but if you’re going through manpower agencies, you must report to the Local Content Secretariat that these are your staff. You cannot say they aren’t your staff, they come from a manpower agency.”
“What we are seeing now, is that they’re employing Guyanese on their register so that they will report to us that they have 75 per cent managerial staff. But it is not a true reflection of their full staff complement. The others are coming from the manpower agency and they’re not reporting them to us, because technically they’re not employed by the company,” Bharrat explained.
Others delay payments for services by months, which can impact local companies negatively since they rely on the payments to reinvest. The Minister noted that if this practice continues, the local players in the oil sector will be ruined.
“Payments and the time it take to pay local companies. We gotta be straight up with each other. There aren’t many Guyanese companies that can wait six months or one year for payments. There may be a few Guyanese companies that can wait three to four months for payments,” Minister Bharrat said.
The Minister noted that yet other companies bundle their contracts, rather than disaggregate them so that small and medium scale enterprises could bid. Bharrat warned that they will be checking companies at the end of every year to ascertain whether they’ve reached the local content targets set out by law. The Minister reminded that there are penalties contained in the local content legislation for not reaching those targets.
“I don’t want to sound too harsh, but if you read the legislation properly, you would see there are some penalties in it. And we will not hesitate to implement penalties if companies are not in compliance with the legislation. In fact, I don’t even have the power to waive those penalties. So it will be you and the law.”
“But we have a chance now to address it and correct that. We want to work with you to ensure that we stop this practice. I know some companies are working towards it and some are still involved in it. So, I ask that you work with the Local Content Secretariat and iron out these issues,” Bharrat further explained.
According to Minister Bharrat, local suppliers have been coming to the secretariat to complain against some foreign companies about the issues raised.
The Local Content Act 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 per cent of office space rental and accommodation services; 90 per cent 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.
These are just a few of the services highlighted in the first schedule of the Local Content Act. The Local Content Act mandates 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.