The recent tabling of the much-anticipated Local Content Bill and its passage represent a win for all Guyanese. This legislation carves out sections of the oil and gas economy for Guyanese companies and Guyanese people.

The main objectives of this legislation are: 

• To prioritise Guyanese nationals and Guyanese companies in the procurement of goods and services for the enhancement of the value chain of the petroleum sector;
• To enable local capacity development;
• To supervise, coordinate and evaluate local content in Guyana; and 
• To promote competitiveness and the creation of industries that will sustain the social and economic development of Guyana.
  

Key Definitions

Guyanese Company: The LCB aims to facilitate Guyanese companies in serving the oil and gas economy – in the multitude of ways it can be served – by mandating that Guyanese companies supply, for example, 75 percent of waste management services by the end of 2022. In order to qualify for such carve-outs, you must satisfy the definition of a Guyanese company:

Guyanese company means any company incorporated under the Companies Act which is beneficially owned by Guyanese nationals who exercise voting rights representing at least fifty-one percent of the total issued shares and, which has Guyanese nationals holding at least 75 percent of executive and senior management positions and at least 90 percent of non-managerial and other positions. 

Local Content Register: In order to qualify for the benefits of this legislation, Guyanese companies must be registered with the Local Content Register. 

Contractor: This includes any person who enters into a Petroleum Agreement with the Minister in accordance with section 10 of the Petroleum Act.

Sub-contractor: Any person with whom a Contractor or Licensee has entered into an agreement for the provision of goods and services within the Contractor’s or Licensee’s supply chain management.

Governance

The Minister of Natural Resources has a general oversight role on the implementation of the legislation and has the power to review and approve or reject, after consultation, the Local Content Plans put forward by the Oil and Gas operators. The Minister also has the power to prescribe local content requirements and coordinates with the groups mentioned below.

The Local Content Secretariat: This is to be established as a unit within the Ministry of Natural Resources responsible for developing guidelines for all aspects surrounding the implementation of the Act such as reporting, procurement, training, research and development and partnerships. 

It must also create and promote the Local Content Register, which houses all ‘Guyanese nationals and Guyanese companies’ entitled to local content carve-outs. Another important role of the Secretariat is to monitor and ensure compliance by Oil and Gas Operators, Contractors and Subcontractors.

Local Content Advisory Committee: This committee will comprise representatives from various ministries of Government and perform an advisory and a coordinating role to assist and support the work of the Secretariat.

Local Content Plan

A Contractor, Subcontractor or Licensee must submit a Local Content Master Plan to the Minister for approval within four months of entering into an agreement for the provision of some Oil and Gas related service. This plan will cover the organisation’s plans and activities for the next five years of its operations.

Every Local Content Master Plan must include:

• An Employment Sub-plan;
• A Procurement Sub-plan;
• A Capacity Development Sub-plan;
• The quality criteria and quantity criteria required for the supply of goods and the provision of services; and
• A statement on, and estimate of, the value of local content to be acquired, delivered and rendered for Guyana. 

Contractors, Subcontractors and Licensees must also submit an Annual Local Content Plan which shall include an annual program and breakdown similar to the Master Plan above.

Failure to comply with the requirements of the LCB, either on the part of a Contractor and its affiliates or on the part of a Guyanese company (in claiming to be ‘Guyanese’ when it is in fact not) will be an offence and make an individual or a company liable to fines of five and ten million dollars respectively.