Pres. Ali floats setting up of consortium for food supplies to oil ships 

Oct 18, 2022 News

---

Kaieteur News – Under pressure to create business opportunities for locals within the oil and gas sector, President Irfaan Ali on Sunday announced that he is pushing for the creation of a catering consortium to tap into the supply of food and other services to the industry.

He told a forum at Leguan on Sunday that Guyana could soon see local chefs directly benefitting from the oil and gas sector, with the establishment of a consortium of cooks supplying food and food items to Floating Production Storage and Offloading vessels (FPSOs). Ali on Sunday disclosed that he has called for the formation of the body, to prepare chefs from across the country to tap into the massive opportunity. “I have instructed the Minister of Natural Resources to work on bringing together a consortium of all our major caterers in the country into one company and let them buy the management skills, whether it is international or regional so that together in a consortium, they could participate in the bidding process to provide all FPSOs offshore with food and food supplies.”

The President emphasised that local enterprises must come together to create consortiums to better position themselves to access economic opportunities. With the right type of integration, through consortiums, Dr Ali said there will be room for massive growth. He pointed out the need to form consortiums to create necessary local linkages. Dr Ali noted that the economy’s immediate requirements are to develop sustainable choices for Guyanese, improve their quality of life, and open up job opportunities. The move will also guarantee Guyanese have equitable access to opportunities.

“These are services that are externalised because we have to learn to work together. We cannot operate in a mega economy if we don’t bring together consortiums. We bring ten small people together, we have a medium company, we bring ten medium people together, we get a large size company. So, we are going to use this mechanism, this network to bring this country together, as part of the ‘One Guyana’ umbrella.”

 By using this approach, Guyana will also strengthen its economy, encourage industrial growth, boost local company capacity, develop a trained labour force, establish a competitive supplier base, and distribute the wealth created by the oil and gas boom to Guyanese citizens. The President said this kind of unity is what the nation needs to advance and requires the involvement of all Guyanese. He said he intends to build a future of equal opportunities for the growth of every citizen regardless of location.

President Ali’s announcement comes several months after the issue of Guyana being saddled with a $300 million daily rental bill for the 30 supply boats that service the oil and gas sector. Guyana in 2016 inked a Production Sharing Agreement with Esso Exploration Production Guyana Limited (EEPGL) and their partners Hess Guyana Corporation and China National Offshore Oil Company. Under that agreement, the operator EEPGL—commonly referred to as ExxonMobil Guyana—is allowed to recover up 100 percent of its exploration and other costs by deducting proceeds up to 75 percent of the production from the Stabroek Block. This publication reported that among the support services being utilised by ExxonMobil relate to the rental of its supply boats. These vessels are typically used to transport supplies to the oil platform and return other cargoes to shore. They also store equipment and provide other support services required.

Earlier this year Ali, while attending a ceremony on the West Bank of Demerara had boasted that every month, Region Three rakes in $50 million when the supply boats come to shore to purchase fruits, vegetables and water from the markets and small shops. This, while Guyana is saddled with a $300 million daily rental bill for the 30 supply boats that service the oil and gas sector. President Ali, while addressing critics of the sector said, “I was speaking to some of the suppliers for the supply boats that goes out to the rig and when you check what they buy in Region Three, in the markets, in food supplies, water, they spend more than $50 million here every month in the markets, more than $50 million every month, buying produce and supplies for those boats.”

He went on to say that such stories are untold while insisting that farmers, small retail stores and supermarkets owners all enjoy the benefits from those sales. The President did not, however, tell his audience that Guyana’s earnings from oil production are being deducted to pay for the supply boats. Presently, Guyana pays about $11 million in rental fees for each of these vessels. When a simple calculation is done against the 30 boats that service the sector, it amounts to over $300 million.

Prominent businessman, Mr. Glenn Lall, the Publisher of Kaieteur News in one of his radio programmes had advocated for Guyana taking ownership of the boats and renting them to the oil sector, rather than settle for a mere $50 million monthly. Lall had explained that if Guyana moves to acquire its own supply vessels, the country would benefit more beyond the ‘grocery money’. He reasoned, “Billions going in oil people’s pockets when the month come from your oil money and he (President Ali) proud to announce the farmers getting their bora, bhagi sell…Trinidad and Suriname paying just over $1million per boat and we are paying $11 million a day. Ten million Guyana losing per day, 30 boats by 10 is $300 million Guyana losing a month and our President proudly saying not once but twice how the people spending $50 million a month. The daily losses could amount to almost $9 billion a month,” the Newspaper Publisher added. Lall was keen to highlight that Guyana would still benefit from those sales if the Government or private persons were to be the owners of the supply vessels, which means the country could benefit twice should it be steered in the right direction.

Local content

Meanwhile, despite enacting a Local Content Legislation last year, to ensure Guyanese citizens benefit from jobs in the oil and gas sector a number of communities are unable to participate due to the lack of internet access and training opportunities, among others. This is according to the Alliance for Change (AFC) party who during a Press Conference last Friday told members of the media that the PPPC Government has not implemented specific programmes to ensure the revenue stream from the petroleum sector reaches and benefits those in the Hinterland. During the recently concluded Guyana Basins Summit (GBS), Lorena Salazar, the Inter-American Development Bank (IADB) Chief of Operations and Guyana Country Representative urged that the oil money must not stagnate on the coasts, but must trickle down to Hinterland communities in Guyana to ensure equitable development in the country.

She said it is critical to leave no one behind. According to her, “that means not just focusing on the coastland but also checking the Hinterland. What are the opportunities of the people in the Hinterland?” The IDB Country Representative argued that the opportunities should not only be extended to the education and health sectors, but also in the areas of communication and access among others. Salazar was keen to note that the future of the country is its people, hence measures should also be taken to explore the skills needed that may not have been taught in school. She pointed out, “So there are several areas that a country of new oil and gas should take a look and I would say that if I can compare to my country and other countries, I would say that that is the best part, of when a country focus on the other sectors (on) how to develop the country.”

To this end, the AFC was questioned whether it believes this has been the undertaking in Guyana. The Party’s Leader, Khemraj Ramjattan told Kaieteur News, “I do not believe that the Amerindians are in any way benefitting specifically from that and that is one of the reasons why we feel that there ought to be a properly worked out strategy. The PPP talks about the Low Carbon Development Strategy and all of that or the Revised Low Carbon Development Strategy but I don’t see anything there which indicates clearly what will be the benefit.”

---

---