Oil contractors can face jail time, $50M fine for failing to meet minimum local content targets

Sep 03, 2022 News

– Oil SERIES PT 4

Kaieteur News
By Kiana Wilburg

For those who are intent on disobeying Guyana’s Local Content Legislation, policy leaders have ensured that there are at least six punishable offences which carry a summary conviction and a fine.

The law states that a Contractor, Sub-Contractor or Licensee who submits, or causes to be submitted, any record or any other information knowing, or ought reasonably to have known, that the submission is false or misleading, commits an offence and is liable on summary conviction to a fine of $10 million.

It continues that a contractor, Sub-contractor, or Licensee who carries out petroleum operations without the minimum local content requirements commits an offence and is liable on summary conviction to a fine of $50 million (this would also take into consideration the bundling of contracts).

Furthermore, a Contractor, Sub-Contractor or Licensee who fails to submit to the Secretariat, the notification of intent to sole source a contract or purchase and in accordance with these Guidelines – commits an offence and is liable on summary conviction to a fine of $5 million.

Additionally, a Contractor, Sub-Contractor or Licensee who fails to submit to the Secretariat, the notification of intent to source through a competitive bidding process, a contract or Purchase order, which is in excess of the value prescribed by the Minister and in accordance with these Guidelines – commits an offence and is liable on summary conviction to a fine of $5 million.

The law also states that a Contractor, Sub-Contractor or Licensee who fails to satisfy the prescribed content requirement of an approval local content plan commits an offence and is liable on summary conviction to a fine of $10 million.

Finally, a Contractor, Sub-Contractor or Licensee who fails to comply with a request by the Minister or Secretariat to review or provide information on, any return, report, record, or any other document pursuant to the provisions of the Act commits and offence and is liable to a fine of $1 million.

BACKGROUND

The Government of Guyana has solidified its commitment to ensuring that the benefits derived from the foreign direct investments into Guyana’s petroleum sector, are captured and retained in-country, through the enactment of the Local Content Act.

That legislation prioritises Guyanese nationals and Guyanese companies in the procurement of goods and services for the enhancement of the value chain of the sector.
The Act also serves to enable local capacity development and provide for the investigation, supervision, co-ordination, monitoring and evaluation of, and participation in, local content in Guyana.

The Local Content Secretariat is mandated to ensure that the provisions of the Act are implemented and functions as the regulatory arm for the monitoring, evaluation, coordination and reporting of local content in the petroleum operations of Guyana.

In so far as the Act mandates every Contractor, Sub-Contractor, or Licensee to implement local content as an essential component of their petroleum operations, the Secretariat, through the issuance of industry guidelines, aims to provide detailed and specific guidance to Contractor, Sub-Contractors or Licensees with regards to their reporting obligations.

As such, these guidelines serve to provide clarity relative to the bid evaluation requirements of the Act.

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