Guyana mulls court action against companies trying to bypass local content laws

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Guyana’s Vice President Dr. Bharrat Jagdeo says the government is mulling court action against international firms which are trying to circumvent local content laws.

“A lot of foreign companies are trying to beat the law,” the Vice President highlighted during a press conference in Georgetown this week.

He continued, “We have a big battle with some of them trying to change the way they incorporate; trying to use legal means to bypass the preferences that we have given only to Guyanese. We have a strong position. You may see us end up in court with them.”

Guyana’s Local Content Act was passed by the National Assembly just over six months ago. It strives to achieve economic diversification by prioritising Guyanese citizens and businesses in the procurement of goods and supplies for the Guyanese petroleum sector. It does so by carving out 40 different sectors with accompanying targets that ensure local businesses can participate and share the benefits of the country’s oil wealth.

In addition to protecting jobs and securing capacity building for Guyanese, the Local Content Act clearly spells out what a Guyanese and a local company are in an attempt to prevent foreigners from disguising as locals.

A Guyanese company is any company incorporated under the Companies Act, which is beneficially owned by Guyanese nationals who own 51% of the company. In addition to this, the company must have Guyanese nationals holding at least 75% of executive and senior management positions and at least 90% holding non-managerial and other positions.

But even with such strict conditions, Dr. Jagdeo shared that some companies are still finding ways to cheat the system.

“Some of them are creating shell companies; getting somebody who has not been in Guyana for the last 20 years or so… and then suddenly helping them to incorporate. They are trying to use every single provision. We have a battle there,” he said.

“But just think about the carve-out. A foreign company or a tier-one company cannot rent a building unless it is from a local – for offices or for dwelling or can’t hire transport except from local or provide security services. Only locals can do that,” the senior government official explained to the media.

Importantly, Dr. Jagdeo estimated the spin-off benefits from local content to be US$700 million annually. At the end of this year, the government will conduct a national capacity assessment and update the law.


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