Local content law requires oil sector to competitively bid for goods, services; gives priority to Guyanese

Last Updated on Wednesday, 22 December 2021, 14:42 by Writer

Guyana’s Local Content Bill, if passed in its current form, will require oil sector companies to competitively bid for the supply of goods and services, even as it specifies quota for Guyanese companies and Guyanese individuals.

“A Contractor, Sub-Contractor or Licensee shall award a contract on the basis of a competitive bidding procurement procedure that has been initiated by a widely circulated public tender process,” the Bill states.

The Bill mandates the foreign oil companies to prove every year that they are employing, training and mentoring experienced Guyanese as well as not discriminating against locals on any grounds whatsoever.

Tabled on Thursday by Natural Resources Minister, Vickram Bharrat, the draft legislation will mandate oil sector to pick the companies with the highest number of Guyanese even if it is five percent more expensive. “Where two or more bids are adjudged to be equal or, two or more bids are within five percent of each other when financially evaluated but is otherwise adjudged to be equal, the bid containing the highest level of local content shall be selected,” states the law.

At the same time, the Local Content Legislation will empower the Minister to essentially grant a waiver for local content requirement if such goods or services cannot be provided by a Guyanese supplier and so allow for sole-sourcing. “Provided that the procurement method of sole sourcing shall only be utilised with the approval of the Minister after consultation with the Secretariat,” the Bill states. Further, the Bill explicitly empowers the Minister to grant a waiver, after consultation with the Secretariat, deems deems any petroleum operation to be of national interest and a contractor, sub-contractor or licensee is unable to comply with the minimum local content level in the performance of any petroleum operation due to the lack of current Guyanese capacity; or compliance with a Master Service Agreement executed by a Contractor, Sub-Contractor or Licensee which is still in force immediately before the coming into operation of the Local Content law prevents the Contractor, Sub-Contractor or Licensee from complying with the minimum local content levels set out.

The contractor, sub-contractor or licensee will have to file a Procurement Sub-Plan that must include a supply chain management strategy, a forecast of required goods and services; identification of the goods and services to be procured from qualified Guyanese nationals and Guyanese companies; provision of Guyanese nationals or Guyanese companies with timely and appropriate access to information, business opportunities, joint venture and partnership opportunities, technology and know-how, procurement systems and procedures suited to the scale and capacity of the local market, contract and payment terms that facilitate competitive financing and growth; and performance management systems and procedures, with feedback and support for improvement.

The procurement strategy, according to the Local Content Bill, should include local content at each phase of petroleum operations; ensures a fair opportunity for Guyanese nationals and Guyanese companies to actively participate and gain experience so as to attain requisite standards; gives first consideration to goods and services, supplied or provided by Guyanese nationals and Guyanese companies; aligns with any procurement guidelines developed.

A Contractor, Sub-Contractor or Licensee will have to provide to the Secretariat a half yearly report on procurement activities for the reporting period; and a comparative analysis of the Procurement Sub-Plan and the procurement activities to monitor compliance; the number of Guyanese nationals or Guyanese companies which supplied goods and provided services to the Contractor, Sub-Contractor or Licensee during the reporting period.

The Secretariat may require any further information from a Contractor, Sub- Contractor or Licensee which the Secretariat considers necessary for the purpose of carrying out the objectives of this Act.

Should the legislation be debated and passed without amendment, Guyanese companies and Guyanese individuals that are on the register could be struck off from the Local Content Register that is being envisaged if there is a change in the status of citizenship of the national or a change in the composition of the company. The Bill states that a Guyanese individual can be fined GY$1 million and a company can be fined GY$5 million as well as taken off the register.

Companies that are not registered with the Local Content secretariat will not be allowed to considered by oil companies or the government.

The Bill provides for the submission of a Local Content Master Plan for approval by the Minster, and a modified Local Content Master Plan where there has been an unavoidable or unforeseen change in circumstances after the time of submitting the Local Content Master Plan.

The Local Content Master Plan has to include an Employment Sub-Plan, Procurement Sub-Plan and Capacity Development Sub-Plan. A Local Content Annual Plan establishes the yearly requirement to implement an approved Local Content Annual Plan. Further the Bill provides for the review of Local Content Plans as well as the processes and timelines for the approval or rejection of Local Content Plans.

In detail, an Employment Sub-Plan shall include a forecast of the hiring needs or training needs of a Contractor, Sub-Contractor or Licensee which includes a specification of the skills and competencies needed; the anticipated shortages of skillsets in the Guyanese workforce; the specific training and competency requirements; anticipated expenditure that will be incurred by the Contractor, Sub-Contractor or Licensee in implementing the forecasted Employment Sub-Plan; and a timeframe within which the Contractor, Sub- Contractor or Licensee will provide employment to Guyanese nationals for each phase of their petroleum operations.

The law will require oil sector companies- Contractor, Sub-Contractor or Licensee- to state what programmes they will have for accelerated industrial and technical education and training for Guyanese nationals and Guyanese companies consistent with the performance standards, and ensuring that first consideration shall be accorded to Guyanese nationals having the relevant qualification and experience:

Specifically, the contractor, sub-contractor or license will be mandated to give preference to experienced Guyanese who must be trained by foreigners. “Provided that where a Guyanese national has the relevant qualification but does not possess the requisite experience, that Guyanese national shall benefit from necessary training, and work alongside a non-Guyanese national who will serve as a coach or mentor for a period determined by the Minister, after consultation with the Secretariat.”

Foreign contractors, sub-contractors or licenses will be required by law to ensure that equal treatment and opportunity is afforded to all Guyanese nationals irrespective of race, political opinions, colour, creed, age, disability, marital status, sex, gender, language, birth, social class, pregnancy, religion, conscience, belief or culture or geographical location in Guyana; and that the the skills of Guyanese nationals are allowed that will allow Contractors, Sub-Contractors or Licensees to meet the minimum local content levels set out.

The draft law states that the contractor, Sub-Contractor or Licensee shall provide to the Secretariat a half yearly report on employment and training activities for the reporting period including the percentages of managerial, technical and non-technical staff; a comparative analysis of the Employment Sub-Plan and the employment and training activities io monitor compliance; and the number of Guyanese Nationals employed during the reporting period, their job descriptions and salary

The Secretariat may require any further information from a Contractor, Sub- Contractor or Licensee which the Secretariat considers necessary for the purpose of carrying out the objectives of this Act.

 

Sectors and Sub-sector for Guyanese Businesses	End of 2022
Rental of Office Space	90%
2. Accommodation Services (apanments and houses)	90%
3. Equipment Rental (crane and other heavy-duty machinery)	50%
4. Surveying
5. Pipe Welding — onshore	25%
6. Pipe Sand Blasting and Coating — onshore	30%
7. Construction Work for Buildings — onshore	50%
8. Structuml Fabrication (cutting, bending, and assembling of steel products) — onshore	3o%
9, Waste Management (disposal, and waste transport services) — Non- hazardous Waste	7›%
10. Waste Management (disposal, and waste transport services) — Hazardous waste	25%
i1. Storage Services (warehousing)	60%
12. Janitorial and Laundry Services	90%
13. Catering Services	90%
14. Food Supply	75%
15. Administrative Support and Facilities Management Services	75%
16. Immigration Support Services	100%
17. Work Permit, Visa Applications, Visa on Arrival, and In-Water Activity Permit	› 0»%
18. Lay Down Yard Facility	90%
19. Customs Brokerage Services	100%
20. Export Packaging/Crating, Preservation, and Inspection	50%
21. Pest Control Exterminator Services	95%
22. Cargo Management/Monitoring	75%
23. Ship & Rig Chandlery Services	25%
24. Borehole Testing Services	20%

Sectors and Sub-sector for Guyanese Businesses	End of 2022
25. Environmental Services and Studies	25%
26. Transportation Services
a. Trucking	75%
b. Ground Transportation — movement of personnel	100%
27. Metrology Services	10%
28. Ventilation (private, commercial, industrial)	70%
29. Industrial Cleaning Services — onshore	75%
30. Security Services	95%
31. ICT – network installation, support services	20%
32. Manpower and Crewing Services	50%
33. Dredging Services	10%
34. Local Insurance Services	90%
35. Accounting Services	20%
36. Local Legal Services	90%
37. Medical Services	25%
38. Aviation Support Services	20%
39. Engineering and Machining	5%
40. Local Marketing and Advertising Services (public relations)	75%