Natural Resources Ministry raises alarm over increase of “fronting” practice in oil and gas sector

The Ministry of Natural Resources has raised an alarm over the increase in cases of locals ‘fronting’ for foreign companies, which undermines the Local Content Act, and in some cases, evade taxes that ought to be paid to the Guyana Revenue Authority. In a release today, the Ministry said as part of its close monitoring of the country’s petroleum industry, the local content secretariat, has intensified its tracking for practices known as “rent a citizen” or “fronting.”

Since the passing of the country’s local content Legislation, Authorities here have had a headache trying to identify genuine local companies and those owned by foreigners with Guyanese listed as the beneficiaries.  The Local Content legislation paved the way for Guyanese-owned companies to provide the bulk of basic services such as security, transportation, food and other services in the oil and gas sector, getting full preference.

But foreign companies have also had their eyes on those services and the Ministry today explained that they have noted the practice of “fronting” in joint ventures. In its definition, the Ministry described “fronting” as an unethical practice where foreign companies use local individuals or local entities as mere fronts to meet local content requirements, while the actual control and benefits remain with the foreign entity. “This practice undermines the objectives and spirit of the Local Content Act, which aims to ensure that the citizens of Guyana benefit meaningfully from and participate actively in the nation’s natural resources sector,” the Ministry said. The Ministry said it is actively pursing measures to curb the issue which has become frequent. One of the steps being taken it said is enhancing its collaboration with the GRA.

“This closer working relationship aims to identify and penalise those engaging in fronting, ensuring that all stakeholders adhere to the legal and ethical standards set forth by the Local Content Act,” the Ministry stated. The Ministry said remains committed to fostering a transparent and equitable petroleum industry that benefits all Guyanese and urged companies and individuals to support its efforts to uphold the local content framework.