Local Content Auditing
Contractors and suppliers to oil, gas, mining and construction clients in emerging economies are under increasing pressure to deliver a portion of the sales value as Local Content.
This can be challenging when the formulae for calculating Local Content are opaque, or when work has been priced on the assumption that the contract will be executed using home-country capabilities and
established
global sourcing arrangements.
To counter these challenges, Local Content Solutions provides contractors and suppliers with the following independent Local Content Auditing services. We offer to:
- identify the applicable regulations and formula, a job that entails interpretation of not only (i) the Local Content compliance requirements contained in the client's original concession agreement, production sharing agreement or mining development agreement, but also (ii) subsequent Government regulations and directives on Local Content targets and reporting, and (iii) contractual provisions between client and contractor/supplier for meeting Local Content targets;
- calculate the proportion of Local Content in the production of goods or delivery of services, according to the applicable regulations and contractual obligations, thereby giving advance warning of compliance or non-compliance;
- calculate the potential for fines to be applied by the client to the contractor for non-compliance with Local Content obligations;
- propose strategies to manage compliance with Local Content targets, be that: (i) human resourcing plans; (iii) on-the-job support to increase Local Content in in-country production or service provision; or (iii) business development strategies for new overseas investments that takes domestic production or service delivery to the 'next stage in the value chain'."
