Private Sector wants expansion of local content services for Guyanese

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Chairman of the Private Sector Commission Paul Cheong addressing the Local Content Forum on Thursday

…Dec 31 earmarked for review of first schedule

The Private Sector has on Thursday lobbied for an increase to the current 40 services which oil and gas companies and their subcontractors must procure from Guyanese, as prescribed in the Local Content Act.

The Private Sector Commission has held a Sensitization and Local Content Forum aimed at garnering feedback on the First Schedule of the Local Content Act. PSC Chairman Paul Cheong underlined that advocating for local content has always been high on the agenda, and evaluating the landscape has become even more paramount.

The Private Sector Commission had formed its Local Content Advisory Committee, which works in conjunction with the Local Content Secretariat to keep the Private Sector informed and engaged on the topics of local content, while raising concerns facing local Private Sector bodies.

The first schedule to the Local Content Act sets out the minimum threshold and level for local content levels in relation to the procurement of goods and services. There are 40 areas, with local participation up to 100.

PSC Chair Paul Cheong is asserting that it is time to expand these categories to maximise benefits for Guyanese. Cheong expressed, “We believe the time (is ripe)to expand those 40 categories, as now the capacity and the skill of Guyanese have expanded. Many companies have invested and have established partnerships. It is now up to us to up our game and deliver quality services in keeping with the standards and requirements of the oil and gas sector.”

He commended the Natural Resources Ministry for addressing the payment period, but shared concerns in relation to contract bundling.

“With regards to contract bundling, we will have come across cases where companies are issuing tenders for a minimum number of services on the one contract, when specific areas could be competitively tendered for to allow local companies to participate. How can there be commitment to local content and the participation of Guyanese businesses in the value chain when there remain efforts to maintain contract bundling?” Cheong pointed out.

Stakeholders at the private sector forum on local content

Regarding the Private Sector calls, Natural Resources Minister Vickram Bharrat recognises there is a capacity deficit which should be analysed beforehand.

“We need to recognize that there is a capacity deficit in Guyana. It is a fact. Nobody is to be blamed, because we are moving at such a speed sometimes it is hard to keep up. So, we need to ensure that we build capacity to truly benefit from local content. The Government is open to revising the schedule, but do we truly have the capacity?” he asked.

In December 31, an assessment of the first schedule will be conducted to look at the 40 services currently outlined for Guyanese. Minister Bharrat added that this capital-intensive sector requires partnerships, as he said, “So we are genuinely competitive in nature, but we got to realize the difference. We got to realize that we’re dealing with a sector that is very capital- intensive.”

Guyana is reaching unprecedented heights, producing 380,000 barrels of oil per day with a one-million-barrel daily projection in some four years’ time.

Employment

During the forum, Senior Petroleum Coordinator Bobby Gossai placed emphasis on measuring how local content is impacting the population.

“The emphasis here is on wanting to measure, because we want to be able to present to you how much local content has impacted on this economy, and we know by now that we are the fastest growing economy in the world. We are going to be a model type of economic system next year and into 2025,” he explained.

He added, “So, in terms of the procurement activities, for us, we want local content to be seen as an opportunity for procurement in Guyana not to be measured in any ad hoc manner, but to be measured in a direct manner as well as an indirect, if you are providing an interrelated service to a secondary business.”

Between January and June, over $310 million entered the economy from registered stakeholders. Gossai pointed towards enhanced collaboration to have real time information to monitor and evaluate. He added that employment is one of the key things to measure, and a pattern has already been observed. The system is now reflecting more Guyanese and less migrant workers.

“Employment is one of the key things that we need to measure for the Local Content Secretariat and the local content reports that are coming in. In fact, what we have been doing is looking at a number of Guyanese against the number of foreigners that have been employed in sector. We have seen the change in patterns, we will also see the projection of new hires for each year. What we want to make sure is that this is on a sliding scale for Guyana,” Gossai pointed out.

Through this engagement, Private Sector stakeholders have been able to share their individual views on how the 40 areas are performing, and how they can be expanded.