Latest update November 22nd, 2024 1:00 AM
Jul 15, 2022 News
…as Govt. moves to review laws to regulate industry
By Renay Sambach
Kaieteur News – Local businesses servicing the oil and gas sector continue to lament the lengthy time it takes the oil and gas companies to pay them for goods and services provided.
The issue of late payments has been a sore one and is being blamed for the stifling local businesses. As such, the government is expected to revise the regulations in the Local Content Act with a view to remedying the situation.
Guyana at the end of last year passed its local content legislation, which caters to locals getting first preference in the country’s oil and gas sector. The Local Content law is intended to regulate the way companies operate in Guyana’s oil and gas sector; employ persons, buy services and the way that they procure goods. Despite the local content legislation being in effect, there have still been some related issues in the industry and several concerns raise.
On Tuesday last, Attorney General (AG) and Minister of Legal Affairs, Anil Nandlall, S.C, met with members of the Georgetown Chamber of Commerce and Industry (GCCI). The GCCI raised several legal issues for discussion relevant to the commercial sector. The Attorney General discussed several other issues of pertinent importance, including, regulating payment arrangements in the oil and gas sector. While speaking to this publication, the Attorney General explained that local businesses have complained of a systemic delay in payments for good supplied and services rendered. “They complained that this delay is having severe impact on their limited capital and liquidity thereby hampering their ability to discharge their contractual obligations,” he added.
According to the Minister, the local businesses related to the government that in many instances, they are unable to secure sufficient credit facilities and as a result, they have to flunk the financial capital in some occurrences. It was noted that in some instances where they are required to pay VAT (Value Added Tax) in relation to monies that they have not yet received, in respect to transactions that they have not received payments for. As such, Nandlall noted that the businesses are requesting some form of regulations that would limit the timeframe for the credit arrangements. “One avenue that is being explored is the promulgation of regulation for the Local Content Act to address the issue,” the AG note.
He recalled that when the Local Content Act was being debated in the National Assembly, the government made a commitment that after it becomes functional – if any inadequacies were to arise or difficulties encountered, regulations would be made to address the issue.
Notably, the Attorney General stated that if the regulations are not effective, the government will then explore other means.
Meanwhile, still on the same issue, Vice President, Bharrat Jagdeo, on Tuesday night during his featured address at the Guyana Manufacturing and Servicing Association (GMSA) mid-year dinner, stated that the legislation provides for the government to regulate the payment terms to local companies. He said, “…the issue of payment terms, we spoke of it in opposition, we raised it with the oil and gas companies and that has to change and the legislation provides for us to regulate this.”
The Vice President noted that a 90-days payment term to smalls firms in Guyana is not acceptable. “We are getting around to regulating that to ensure that Guyanese companies could have better payment terms,” Jagdeo noted.
Minister of Natural Resources, Vickram Bharrat, is reported in the media saying government will not tolerate the shortchanging of citizens in their own country after it was brought to the attention of the administration complaints of unfair competition and other issues in the industry. The minister had pointed out that foreign companies have been failing to pay locals in a timely manner, with some payments taking as long as four months.
He explained that it is the practice here in Guyana for companies to be paid shortly after completing jobs so as to ensure the business has the resources required to start new projects. On the other hand, he said that while some companies can wait for several months to be paid, they are sometimes told that issues were encountered with the invoices, thereby forcing a longer waiting time or double the time for payments, even though the glitches in the system were not their fault. The Minister urged the foreign companies to set a timeline for the processing of payments which will otherwise result in the ‘death’ of local contractors, effecting unfair competition as well.
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