Local content laws: GCCI denounces practice of “sham” partnerships in private sector

…urges Local Content Secretariat to continue strict vetting

While Guyana’s progress with local content has been remarkable, the Georgetown Chamber of Commerce and Industry (GCCI) on Saturday had cause to issue a warning about sham partnerships intended to get around the Local Content Act.
In a statement, the GCCI expressed its consternation at what it noted was an emerging trend in the private sector, where sham partnerships are being formed. This comes even as the GCCI has been an advocate of meaningful and genuine partnerships to foster local participation.
“These faux ventures – referred to as ‘fronting’ or ‘rent-a-citizen’ – run counter to the spirit and intent of the Local Content Legislation (LCL). It has the potential to decimate ‘in country value retention’ which is one of the main objectives of the LCL.”
“Such rent extraction creates a gamut of problems for a country, including, the inability to realise its full growth potential. It is our collective responsibility to ensure that we act as responsible stewards for Guyana’s development,” the chamber said.
According to the GCCI, it will continue to be intolerable of individuals and companies who “front” in an effort to bypass the local content laws. Additionally, the chamber expressed worry about private sector members who attempt to justify the practice and even lobby for it to be normalised, noting that this is being complicit in a dangerous act.
“As such, the GCCI encourages the Local Content Secretariat to continue its vetting of companies applying for a Local Content Certificate, or its renewal, in a thorough fashion. As an organisation, we will continue to support the efforts of the Local Content Secretariat to weed out this parasitic behaviour which dampens the prospects for Guyana’s future,” GCCI further said.

After being passed in the National Assembly in December 2021, the Local Content Act was enacted in January 2022. The Act lays out 40 different services that oil and gas companies and their subcontractors must procure from Guyanese 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 pest control services; 100 per cent local insurance services; 75 per cent 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.
Since the passage of the Act, Guyanese individuals and companies continue to benefit. There has been a noticeable uptick in foreign companies looking to invest in Guyana who are actively seeking partnerships with locals.
According to the Local Content Act, contractors, sub-contractors and licensees operating in Guyana’s oil and gas sector, are also required to submit annual Local Content Plans that detail how they intend to comply with the Act and create opportunities for locals.
The Local Content Secretariat is meanwhile responsible for issuing Certificates which confirm that the respective companies have delivered on commitments and targets set out in their annual plans. Since the establishment of the local content legislation, the first batch of companies were issued with these Certificates of Compliance in May 2023.
These companies were ExxonMobil Guyana (represented by President Alistair Routledge), Technip FMC (represented by Nicolas Siccard), Halliburton Guyana (represented by Vahman Jurai), Baker Hughes Guyana (represented by Jon Charles Rhodes) and Saipem Guyana (represented by Gianluigi Della Rosa).
On Thursday, Minister within the Ministry of Public Works, Deodat Indar had spoken out against the practice of fake partnerships, during the Guyana Manufacturing and Services Association’s (GMSA) mid-year dinner. He had accused certain members of the private sector of undermining the Government’s efforts to improve local content, through their “rent-a-citizen” scheme. (G3)