‘There is nothing we can do’

Aug 18, 2022 News

– Local Content Secretariat says powerless to rectify lengthy delays in payments to small businesses by oil companies

Kaieteur News – While it has taken note of the complaints of the lengthy wait by small contractors to receive their payments for the provision of goods and services to the oil companies, the Local Content Secretariat (LCS) said it is virtually powerless to bring any redress to the issue.

Director of Local Content Secretariat, Martin Pertab

This was explained by the newly minted Head of Communications at the LCS, Mikaila Prince. Prince told Kaieteur News that the lengthy delays in payments to small or medium-sized business are not an isolated one. She noted that the delay in payments to small businesses is an international norm with the oil companies. “So there is basically isn’t anything that the Local Content Secretariat can do to address the issue,” she said. Her comments come even as small/medium businesses are seeking to tap into the opportunities of the oil and gas sector continue to complain about the long wait for payment for their goods and services.

Local businesses have complained on having to wait for up to six months or later to receive payments for goods and services already provided to oil and gas companies. Just last week, President of ExxonMobil Guyana, a major player in the field, Alistair Routledge not only admitted to forcing companies to wait for several months to receive their pay, but is also defending the lengthy waiting time.

Routledge during an interview with the Newsroom on Friday sought to justify the extensive period in which businesses wait for their payments. He said that the costs are subject to a rigorous process which is an accepted norm around the world and that their clients have the assurance of being paid, despite there is no definitive timeline.

In the meantime, Director of the LCS Martin Pertab told Kaieteur News that while LCS has taken note of the complaints by small and medium size businesses, it will continue to engage both the contractors and suppliers to try to find resolves to the issues.

In a statement in response to Kaieteur News, Pertab said, “It must be noted that this practice is one that is not supported by the Local Content Secretariat, which aims to promote and preserve the interests of Guyanese and Guyanese-owned businesses in our rapidly expanding oil and gas industry.”

He noted that “The Local Content Secretariat, and by extension the Ministry of Natural Resources realise that in order to create a system that works in the interest of both contractors and suppliers, continuous engagement is warranted at all levels.”

“This has to do with the fact that local content in Guyana is relatively new and a work in progress. To this end, we have been working closely with contractors, sub-contractors and suppliers to facilitate implementation of the Local Content Act,” he added.

Earlier this year, the National Assembly approved $22 million to begin works on the establishment of the Local Content Secretariat – the body responsible for overseeing and implementation of Guyana’s the Local Content Act. The Local Content Act outlines 40 different services that oil and gas companies and their subcontractors must procure from Guyanese companies by the end of 2022.

For instance, these companies must procure from Guyanese companies, 90 percent of office space rental and accommodation services; 90 percent janitorial services, laundry and catering services; 95 percent pest control services; 100 percent local insurance services; 75 percent local supply of food; and 90 percent local accounting services. These are just a few of the services highlighted in the first schedule in the Local Content Act.

The Act also details penalties for oil and gas companies and their sub-contractors who fail to meet the minimum targets of the legislation, as well as those who are in breach of the Act. These fines range from as low as $5 million to as high as $50 million.

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