Latest update January 14th, 2025 3:35 AM
Latest News
- ‘Guyana could have received at least US$13B to date from oil’
- ExxonMobil preparing for oil production at 6th project
- Final draft of Gaza truce deal presented to sides after ‘breakthrough’, official says
- Venezuela detains tanker falsely flying Guyana’s flag
- ‘Pres. Ali made it clear no renegotiation of Exxon contract’ – Hess boss tells conference
Modify Procurement Strategy to maximize participation of local businesses – Industry Analysts
By Kiana Wilburg
There are several tactics emerging oil producers like Guyana can employ to maximize the participation of local firms in the oil and gas sector.
One of the most effective ways is through the modification of the procurement strategy that governs the sector. This is according to the International Petroleum Industry Environmental Conservation Association (IPIECA).
Headquartered in London, IPIECA develops shares and promotes good practice and knowledge to help the oil and gas industry of countries improve environmental and social performance.
According to IPIECA, there are several modifications a country can make to ensure local businesses are given a fair advantage. It outlined one option to be Reservation or ‘set asides’ provisions which mandate that only qualified local firms are allowed to bid for certain contracts.
IPIECA also said that the procurement strategy can be improved by providing local companies with additional information, reducing the size and complexity of the scope, or simplifying procedures or processes to make it more likely for them to participate in the procurement process.
The Association said that modifications can be made to the Bid Evaluation Process to help businesses have more participation. In this regard, it said that the General Preferencing provision can be used. This allows for a local bidder to be selected when it is relatively close to other competitors on quality and price.
Another effective change which can be made to the evaluation process is called Price preferencing. This allows local bidders to have a set preference figure discounted from their tender price. IPIECA said that this provides a price advantage against outside competitors.
Significantly, the Association said that feedback should be given to unsuccessful bidders. IPIECA said that this enables local firms to improve and can also lessen potential grievances on the part of unsuccessful bidders.
IPIECA said, too, that the procurement strategy governing the sector should also be modified to ensure that there is maximum participation of local workers. It said that this can be done by making mandatory requirements for the employment of local enterprises or workers.
A PRIOMINENT EXAMPLE
IPIECA also noted that oil firms can be called on to play a more effective role in ensuring the development of the local business community to service its needs. To demonstrate this, it referenced CAE (Centro de Apoio Empresarial).
IPIECA said that this is a prominent example of what an effective enterprise development programme looks like for the oil and gas industry.
The Association said that CAE seeks to ‘build the capacity of Angolan businesses to participate more actively and with greater success in the oil and gas industry as key suppliers of quality products and services—in order to create jobs, promote skills transfer and achieve locally-based economic growth’.
CAE was initiated in partnership by Sonangol, BP, Chevron, ExxonMobil and Total. Citizens Development Corps (CDC), a US-based international development organization with expertise in enterprise development, helps to implement the project.
From its inception in 2005 to the end of 2010, a total 302 contracts in the oil industry were awarded to CAE-client Angolan businesses, with a total value of US$212M. IPIECA said that CAE offers a range of services to facilitate local enterprise participation in the industry.
These include business training in bids and contracts, ethics, financial management, supply chain management, human resources, marketing and communication; and business planning and quality management.
It also provides advisory services which includes one-to-one advice and mentoring to companies to improve managerial efficiency and quality of service delivery, as well as specific guidance on bid submission and post-contract support.
And that’s not all. CAE also acts as a liaison between multinational company procurement departments and registered Angola clients. This is implemented by channeling procurement announcements to registered suppliers to gauge interest and capacity, and then providing a list of capable candidates to the company soliciting competitive bids for a specific product or service.
IPIECA notes that through this initiative which also saw modification of the procurement strategy, allowed for local businesses to benefit substantially.
Similar Articles
THE BLUNT OF THE DAY
Sports
Features/Columnists
The PNCR and AFC are a blight on democratic politics
Peeping Tom… Kaieteur News- The People’s National Congress Reform (PNCR) and the Alliance For Change (AFC) have forfeited... more
Clarifying misconceptions about the Panama Canal
Sir Ronald Sanders (Antigua and Barbuda’s Ambassador to the US and the OAS) By Sir Ronald Sanders Kaieteur News–... more
Weekend Cartoon
