Businesses still struggling to benefit from oil sector

Aug 05, 2022 News

Six months after passage of local content law…

Kaieteur News – Six months after the much vaunted Local Content legislation was passed, local small and medium-sized businesses are still facing barriers to benefit from the petroleum sector.

President of the GCCI Timothy Tucker.

The issue was highlighted recently by the Georgetown Chamber of Commerce and Industry (GCCI). The Chamber in a statement said that it has taken note of recurrent contract bundling practices within Guyana’s petroleum sector and expressed its disapproval of this practice. According to the GCCI, contract bundling, which is the consolidation of the procurement of various goods and services under one contract, has seemingly become a practice of companies within the petroleum sector. Contracts are being solicited for Expression Of Interest (EOI) and Requests For Information (RFI) under one umbrella by various players in the industry.

The Chamber said too that the sum-effect of this practice is that Micro, Small And Medium-Sized Enterprises (MSMEs) are unable to compete in the space since the ‘bundling’ practice will set an artificial barrier to their participation. Apart from its obvious hindrance to MSMEs wishing to service the sector, the Chamber believes that contract bundling works against the spirit and intent of Guyana’s Local Content Act (2021) thereby, defeating the objectives of the Act as it relates to private sector development.

The Chamber calls on the Local Content Secretariat of the Ministry of Natural Resources to examine this practice and its harmful effects on the full utilization of the Local Content Act and, by extension, private sector development in Guyana.

This is not the first time the issue is being highlighted.

Back in May, Minister of Natural Resources, Vickram Bharrat had put oil companies on notice that the Government of Guyana 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. Bharrat listed a number of issues he said are raised with him daily. To this end, he explained that local businesses have complained that oil companies have been bundling services for catering, security, garbage collection and other technical offshore support systems as part of one contract. This, Bharrat said, has been posing significant challenge to locals, as they are burdened to offer a service they are not registered to. In fact, this often lends to the oil company failing to achieve the local content targets. To ensure that the breach of the fresh law is not the outcome, the Minister had urged that the practice be stopped.