LCA led to successful collaborations between int’l firms & Guyanese businesses – US State Dept. Report

– firms also partnering with locals to purchase, lease land

Since the People’s Progressive Party/Civic (PPP/C) Government enacted the Local Content Act in 2021, many international firms have successfully partnered with Guyanese companies to explore investment opportunities in Guyana, according to the recently released Investment Climate Report 2024.
The report that was published by the United States (US) State Department evaluated the investment climate of over 160 countries around the world and whether they have adopted Responsible Business Conduct (RBC) norms.
“The GoG passed the Local Content Act (LCA) on December 31, 2021, which establishes baseline requirements for foreign and local firms operating in the country’s oil and gas sector to hire Guyanese and source local materials. The legislation lists local quotas for 40 business services and material inputs, which must come from Guyanese businesses,” the report states.
“The targets range from near total local sourcing (90 to 100 per cent) for services like ground transportation of personnel, local accounting and legal services, and pest control services to lower levels (between five to 25 percent) for more technical items like dredging services, engineering and machining, borehole testing, environmental services and studies, and aviation support services,” the report adds.
Further, it stated that many international firms have been able to find success partnering with local companies. At the same time, however, the report notes that some firms have expressed concerns over local capacity in Guyana and possible changes to the Act.
“Many firms have found success in partnering with local companies. Patience, good legal counsel, and a registered accountant have been critical success factors. However, local firms involved in joint ventures or subcontract relationships with foreign companies have expressed concerns over the capability of local partners and the possibility of a stricter LCA, which could delay their operations and create conditions for undue influence and rent-seeking behavior.”
“Guyana remains open to public-private partnerships for the development of several large infrastructure projects, but firms may need to seek financing from outside of Guyana due to the country’s shallow financial markets,” the report adds.
Another observation the report makes is that international companies have been partnering with local ones to acquire land for investment purposes. The report states that business support organisations and specialised consultants can help these foreign firms with the process of entering the market.
“Under the Status of Aliens Act, foreign and domestic investors have the same rights to purchase and lease land. However, the process to access licencing can be complex and many foreign companies have opted to partner with local companies, which may assist with acquiring a licence.”
“The Investment Act specifies that there should be no discrimination between foreign and domestic private investors, or among foreign investors from different countries. The authorities maintain that foreign investors have equal access to opportunities arising from privatisation of state-owned companies,” the report states.
In December 2021, the National Assembly passed the Local Content Act which 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 of pest control services; 100 per cent of local insurance services; 75 per cent of local supply of food; and 90 per cent local accounting services.
The Local Content Act mandates penalties such as fines ranging from $5 million to $50 million 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.
In April of this year, Attorney General Anil Nandlall, SC, had said that the Local Content Act could be put through revisions later this year to expand the carved-out areas of opportunity for Guyanese, following consultations with relevant stakeholders and further data from the Local Content Secretariat.