Review of Local Content Act to be completed soon – Jagdeo

The government will soon complete a comprehensive review process for the country’s local content act, to ensure that Guyanese have adequate access to opportunities to participate in the oil and gas sector.

General Secretary of the People’s Progressive Party, Dr Bharrat Jagdeo, made the disclosure during his weekly press conference at Freedom House on Thursday.

He highlighted that there were several areas where locals could not meet the requirements to supply the demand, and exceptions had to be made in these cases.

“There were other areas where we can now expand, but there are some loopholes that people are capitalising on, and some local companies have been acting as a front for some foreign companies, and they have to beware, 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 companies, just utilising them, then we’re looking at a number of measures that will hopefully address these issues,” he added.

Earlier this year, ExxonMobil announced that combined spending amounted to some US$400 million in 2022, with more than 1,500 companies, and over 5,000 Guyanese employed under the company and its contractors. According to Dr Jagdeo, with the government’s plans and the expansion of offshore activities, this number is set to skyrocket to $1 billion by 2027.

“That is a large sum of money to be spent procuring goods and services from our people. So, we are very pleased that the act was passed. It was a commitment we made in opposition as one of the ways that we can get more benefits aside from the revenue stream that would already be affected because of the lack of ringfencing and the lower royalty rate, that we can get more from their spending in the country, and to integrate more, the offshore economic operations to the local economy,” he related.

The act lays out 40 services that oil companies and their sub-contractors must procure from Guyanese companies and Guyanese nationals. It also imposes penalties for oil and gas contractors and sub-contractors who fail to adhere to the requirements set out in the law.

“That law has created a lot of room for Guyanese and Guyanese investors to benefit from spending that the oil companies would have made that would not have been done in Guyana, had it not been for the law,” the GS said.