Tier one contractors operating in Guyana’s oil and gas sector have complied with the government-issued order to pay local suppliers of goods and service within 45 days and have amended their Local Content Master Plans to reflect such.
According to a statement from the Local Content Secretariat (LCS) of the Ministry of Natural Resources (MNR), several companies including SBM Offshore and Halliburton have amended their Local Content Master Plans to ensure that Guyanese suppliers are paid within 30 to 45 days following the receipt of correct invoices.
The signing of the amended plans was done at the ministry’s head office in Kingston on Wednesday. Vickram Bharrat, the Minister of Natural Resources, reminded contractors about the importance of implementing the amendment while pointing out that appropriate contract and payment terms promotes local suppliers’ competitive financing and growth, according to the release.
Vahaman Jurai, Halliburton’s Country lead said, the company’s five-year local content plan is in line with Halliburton’s guiding principle of Global Citizenship. “Halliburton is eager to work closely with our local vendors [and] sharing our knowledge when needed. We hope to significantly contribute to the development of Guyana’s oil talent in the oil and gas sector, whether through the university programmes we support or through hands-on experience working with us,” the release quoted Jurai as saying.
Amid concerns that some oil and gas companies were taking as long as 90 days to pay local suppliers of good and services, the government ordered that this period be contracted to within 45 days.
A statement from the LCS earlier this week had said that the Government and the private sector have examined a thirty-day payment period for Guyanese and Guyanese businesses that supply goods and services to the petroleum
sector. Upon further assessments and engagements, the Secretariat wrote to contractors and sub-contractors instructing them to include an amendment to their five-year Local Content Master Plan for local companies to be paid between 30-45 days upon the correct receipt of an invoice.
Contractors have committed to fostering local content by prioritizing Guyanese nationals for employment; implementing policies that will ensure that Guyanese are treated equally; incorporating the requirements of the Act and the Procurement and Bid Evaluation Guideline issued by the Secretariat into their procurement strategy; planning capacity-buildings activities for Guyanese nationals and Guyanese companies that supply goods and services to the industry and projecting anticipated expenditure on local values.
“The Ministry of Natural Resources through the Local Content Secretariat will continue to work with stakeholders to ensure that the goals of the Local Content Act are achieved,” the ministry assured.
Bharrat Jagdeo, Guyana’s Vice President had said that the 90-day pay delay was an unfair practice to local companies, as they are not afforded the full range of opportunities available to them. He also said that as they aim to address these issues, government will also have to find ways to address another thorny matter – contract bundling. With this consolidation of a contract for goods and services, some local companies are locked out from tendering opportunities as they are unable to fully meet the requirements of the ‘bundled’ services. Local companies have complained that the services they are capable of providing are often bundled with others that they cannot provide, thereby preventing them from bidding for some contracts in the sector.
“I believe the oil companies and the first tier contractors can do much more to present the opportunities here in a manner local people can utilise… There must be fair opportunities for Guyanese and other companies to be able to identify and bid on opportunities that are available to them,” he stated. “They can’t pay local companies in 90 days. I don’t care who defends that, Exxon or not… We will close this,” Jagdeo said.
Meanwhile, the Georgetown Chamber of Commerce and Industry (GCCI) yesterday welcomed the inclusion of the 45-day payment period.
“The Chamber has been of the firm view that, to fully realize the benefits of the Local Content legislation, suppliers to the industry must be paid within a timely fashion, such as the identified 45-day period. It is, however, unfortunate that the Tier 1 contractors could not make timely payments in an independent manner, without having to be regulated into such by the Government of Guyana”, the GCCI said.
The GCCI called upon Tier 1 contractors to play their part in the development of local content and operate both within the spirit and intent of the legislation.
