Local Content earnings projected at US$720M by year end – Pertab

– says companies involved in ‘fronting’ will be refused Local Content certification

Local Content earnings for the first half of 2023 have accounted for US$322 million, while thousands of Guyanese have benefitted from opportunities to provide services to the sector.
Those positives coming out of the country’s Local Content Act have been shared by Head of the Local Content Secretariat, Martin Pertab, during a recent press conference in which he projected earnings of US$720 by the end of the year within 40 carved out areas under the Local Content framework.
Some US$518 million has been categorized as expenditure under procurement. These projections were made by utilizing data from annual plans submitted by registered companies, as well as from data garnered from actual expenditure over the half-year period.
Pertab told the media, “As of June 2023, our actual expenditure related to the 40 carved out areas was somewhere around US$322 million, representing 62 percent of the annual target. We have also seen an increase in new hires…We have seen a 24 percent increase in Guyanese hire.”
There are 840 local companies registered to provide services under the Local Content Secretariat. This translates to employment for 33,943 Guyanese directly and indirectly linked to supporting the sector.
The National Assembly passed the Local Content Act in December 2021. It outlines 40 different service areas that oil and gas companies and their subcontractors must procure from Guyanese and Guyanese-owned companies.
Those 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.

‘Fronting’
Pertab has again drawn attention to complaints of ‘fronting’, a practice also called ‘rent-a-citizen’, in which foreign companies employ Guyanese citizens and/or Guyanese businesses in order to bypass the provisions of the Local Content Act, including the stipulation that only companies that are 51 per cent owned by a Guyanese can benefit from the 40 carved out service areas.
In terms of beefing up requirements to clamp down on such practices, Pertab has informed that the Secretariat is working in unison with the relevant authorities, while adding that companies involved in ‘fronting’ will be refused Local Content certification.
“The Private Sector has been very vocal. We have met with them and discussed ways of addressing this. One of our approaches is to add some more requirements when it comes to the purpose of registration. As of now, companies will have to submit additional documents, like audited financial statements, where we would see their performance. We’re also working closely with GRA, where Guyanese who claim to own 51 percent of the company will declare they are working with them,” Pertab indicated.
This week, Vice President Dr Bharrat Jagdeo divulged that Government will soon revise the Local Content Act (LCA) with the aim of expanding the carved-out areas that were set aside to benefit Guyanese companies, as well as fixing all the loopholes that are being taken advantage of.
He has been quoted as saying, “There are some loopholes that people have been capitalising on, and some local companies have been acting as a front for some foreign companies, and they have to beware, too, that we’re coming after these local companies through the tax system. So, if they’re using that to benefit unfairly by bringing in the foreign to just utilising them, we’re gonna be looking at a number of measures that will hopefully address these issues too. So, yes, we’re looking at [revising the Local Content Act]. It should happen soon.”
United States oil giant ExxonMobil, which is producing oil offshore Guyana with its partners Hess Corporation and CNOOC Limited, disclosed earlier this year that it spent some US$400 million in 2022, with more than 1500 local companies and over 5000 Guyanese employed under the company and its contractors.
Last August, Director of the Local Content Secretariat, Martin Pertab, had noted that the strengthening and revising of the Act is high on the agenda. In fact, he disclosed that work had already started on the process of drafting the new legislation, and once completed, it would be released publicly for countrywide consultations and feedback from stakeholders, before being finalised and taken to the National Assembly.