Jagdeo too lenient on oil companies

Sep 03, 2022 News

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…more empty promises being made to address Local Content woes – Norton

Kaieteur News
By Davina Bagot

Two weeks ago, Vice President Bharrat Jagdeo addressed the issue of contract bundling by the oil companies, inserting that the government will address the matter. However, Opposition Leader, Aubrey Norton believes that this is another empty promise made by Jagdeo, even as local businesses continue to decry the situation in which the Local Content Secretariat has noted is simply an industry norm.

The Opposition Leader in an interview on Wednesday told this publication that this explanation stinks of incompetence.

His position on the matter is, “If you pass a Local Content Act then you are obligated to do everything to ensure it functions in the way it is intended and therefore for them to say, this is just a normal course of thing…that sounds like mere incompetence to me rather than what they are suggesting.”

He went on to explain, “Jagdeo has never been a competent person and therefore Jagdeo has always lived on promises and don’t necessarily deliver but I don’t know what else is expected.”

Norton believes that a strategic method of addressing this particular issue would be to first listen to the concerns raised, before moving to identify measures to iron out those. A third step, which he believes is equally important would allow for a constant review mechanism which would seek to ensure the issue remains resolved rather than repeat itself.

Further, he told this publication that from the People’s Progressive Party’s (PPP’s) posture, it is evident that the political group is not concerned about the wider public sector, but rather “an elite” few.

“The government doesn’t really promote the private sector, they promote an elite group in the private sector while the wider private sector is left to battle on its own, and if they want to promote the interest of the wider private sector, then they would have a structured approach to deal with the local content matter rather than suggest that this is just an industry norm,” he said.

On the issue of the VP, who has been calling the shots in the country’s petroleum sector, being too lenient on the oil companies, the Leader reasoned, “I said the government is incompetent, second, I don’t think they are developing the human resource and institutional capacity to be able to deal with the oil companies and therefore if you add to that corruption, you would recognise in some regard the government wouldn’t want those problems solved because it will eat into the corruption money, so it is not only lenient, it’s a function of what the government perceives as its interest.”

To this end, Norton concluded, “The government has effectively abandoned the people of Guyana though they made the point regularly that the people must benefit from these contracts and from oil generally.” As such, he argued, “if they don’t build the capacity to do what they need to do, they will always come over as lenient and weak to the oil companies.”

During his last press conference, VP Jagdeo told reporters that the government will be addressing the complaints from the local private sector.

He explained, “We made it clear to the oil and gas companies that it’s not just about local content, the big dealing with local content is the carve outs that there must be a fair opportunity for Guyanese and other companies to be able to identify and bid on other opportunities that are available to the company.”

Jagdeo added that while there are some technical areas which would prove difficult to unbundle, he believes that the oil companies and the first tier contractors can do much more to present opportunities for locals.

According to him, “I’ve seen a lot of people who pushed us to be very aggressive on the local content legislation and to look at high ratios for carve outs, they are doing very little – just sitting around griping – these are some local companies too, sitting around griping all day long instead of setting themselves up to make use of these opportunities.”
Despite the passage of the Guyana’s Local Content legislation in December 2021; local businesses have been struggling to benefit from the 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.
Since the passage of the legislation, several members of Guyana’s private sector have voiced concerns in relation to local content issues, particularly, the bundling of contracts by oil companies and the lengthy time it takes oil and gas companies to pay local businesses for goods and services provided.

President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker has reiterated the issue of the bundling of contracts by oil companies on numerous occasions. He argued that this has been stifling local businesses.

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.

ExxonMobil and Contract bundling

Meanwhile, President of ExxonMobil Guyana, Alistair Routledge has made it clear that the bundling of contracts serve as a very useful function, hinting at the same time that Guyanese should become comfortable with this norm.

During an interview with an online media outlet, Newsroom, Routledge was asked whether the company engages in contract bundling to which he answered in the affirmative.
He noted that ExxonMobil Guyana is an oil and gas operator, hence it does not specialise in other areas, pointing to the need for specialised services to be offered to the company. In offering a case in point, Routledge in the interview said it was only earlier in the week that the company convened a meeting with a group of local contractors, indicating that Exxon was in search of a company to assist in office management.

According to the subsidiary’s President, “We’re an oil and gas operator, now take for example of say running an office, we recently held a request for information (RFI) or interest session with a number of local companies earlier this week and we made the point that we are not an office management company; we’re an oil and gas operator. So, we are looking for a company that can help us to run an office.”

He went on to point out that this means, any client hired by the company to “run the office” will also have to offer janitorial and pest control services for example. “We then would expect that company will go looking for particular services like janitorial services, like ground maintenance services, pest control, that is normal,” Routledge indicated. Adding that “the benefit of us passing that, if you like, as a managed service to another company is they then will find those services with local companies as well and when they go and they manage other buildings, which is their business, they then will provide other opportunities for those sub-contractors in that chain.”

As such, he contended, “Yes, some people have criticised bundling, but it actually serves a very useful function in cascading opportunities through the supply chain whether it’s in running offices, whether it’s providing logistic services or whatever it may be, it is normal practice around the world to have this normal structure in any industry.”

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