-says gov’t to address foreign companies dodging Local Content Act

PRESIDENT Dr. Irfaan Ali is very concerned about the pervasive issue of “fronting”, which poses a significant threat to the integrity of Guyana’s Local Content Act (LCA) and has said that urgent action needs to be taken.

Addressing attendees at this year’s Local Content Summit which was held last week at Pegasus Suites and Corporate Centre in Kingston, Georgetown, President Ali underscored the urgent need to tackle this practice head-on, highlighting its detrimental impact on genuine local participation and economic development.

“We saw that the registration for local companies would have increased, tremendously. We also saw that there are some issues that we have to address, which include fronting and rent seeking. That is, renting a local company or renting a local name or renting citizens. That is a hindrance to local content that must be addressed, very frankly, very honestly, if we are to be truthful about the conversation on local content,” President Ali declared during his keynote address last Tuesday.

This phenomenon – commonly referred to as ‘fronting’ or ‘rent-a-citizen’ – has the potential to reduce the financial benefits accumulated by Guyanese and runs counter to the spirit and intent of the LCA.

Recently, Attorney-General and Minister of Legal Affairs, Anil Nandlall, S.C., announced that the country’s local content laws will prevent this.

The updated local content laws will have a significant impact on Guyana’s economy in the years to come. With the country poised to become a major player in the global oil and gas industry, the laws will play a crucial role in ensuring that Guyana’s citizens benefit from the wealth generated by the sector.

The laws aim to ensure that companies operating in the country hire a certain percentage of local workers and use local goods and services. The decision to update these laws comes as oil production is expected to increase in the coming years.
This means that the country will need to develop its workforce and infrastructure to meet the growing demands of the industry. As a result, the updated laws will play a crucial role in shaping the future of Guyana’s oil and gas sector.

The laws are designed to promote economic growth and development within the country. By requiring companies to use local goods and services, the laws aim to boost local businesses and create jobs for Guyanese citizens.

According to the legislation, 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.

The updated laws will likely include new provisions that address issues such as training and capacity building for local workers, as well as requirements for the use of local content in the supply chain.

In 2022, the LCA was challenged by the Trinidadian-owned company, Ramps Logistics Guyana over the non-issuance of a local content certificate.
Acting Chief Justice Roxane George, S.C., in her ruling, ordered the Local Content Secretariat (LCS) to issue a local content certificate to the company. The LCS has since complied with the order.

However, the Chief Justice noted that the Local Content Act “clearly needs” regulations to prevent arbitrary decision-making.

Minister of Natural Resources, Vickram Bharrat during a recent press conference said ‘rent a citizen’, has been one of the major issues the Local Content Secretariat is confronting.

“We have seen many Guyanese, who I know personally, who you know personally, many companies advocating to have a local content legislation in place so that Guyanese can benefit from the oil-and- gas sector. Today, sadly, we are seeing some of those same individuals fronting for international companies; setting up shell companies,” he said.

However, Minister Bharrat said that they need to ensure that enough due diligence is done to eradicate the issue of ‘fronting’ and move away from that.
Further to this, he appealed to Guyanese to not be engaged in these activities and noted that if they want to truly be involved in the sector and provide goods and services, it must be done the right way.

“Of course, there are penalties in the legislation, and if people continue to do so, we will move towards instituting serious penalties for fronting,” Bharrat added.

To date, while over 800 companies have been registered at this stage, the Local Content Secretariat has observed that some Guyanese are only registering for the purpose of having a certificate.