Let us suppose that there is foreign logging company in Guyana. The company requires trucking services to haul lumber.
It hires a local company to do the work. For every trip, it pays the trucking company $20,000.
The company in turn pays its truck driver, $2000. This leaves the trucking service with $18,000 and therefore this $18,000 represents non-employee local content since the money is retained by the local company.
Suppose the foreign company then decides to buy its own truck. It means that the local truckers lose $18,000, assuming of course that a local driver will be employed to drive the foreign-owned truck.
Now extrapolate this to a foreign gold mining company. The company hires local aviation services and pays them, $100,000 per flight. The local aviation company pays it pilots $20,000 per flight which means that non-employee local content is $80,000 per flight.
Suppose now that the foreign gold mining company instead of hiring a local aviation service decided to buy or lease its own aircraft. It still may have to employ a local pilot, but the fact remains that the non-employee local content is now lost to local companies. That money is now held by the foreign gold mining company.
The excuse therefore being made by a mouthpiece of Aurora Gold Mines is that the company’s purchase of a Twin Otter DHC6-300 aircraft and that the craft will require the services not just of six Canadian but also eight Guyanese.
We need not enquire as to from which of two groups, the pilots or the porters will be drawn. What is obvious is that both employee local content and non-employee local content are going to suffer?
The other benefits which the mouthpiece claims will be accrued as a result of the use of the company’s newly acquired aircraft are not additional benefits to the aviation sector.
The local operators would have been generating these businesses.
In other words, the Aurora Gold Mines by acquiring its own plane is taking bread out of the mouths of Guyanese. The acquisition of its own plane takes business away from locals, plain and simple.
Foreign companies have a right to decide what is most economical for them. If it enhances their bottom line, then the company makes a rational decision.
However, the story is not that simple. You see Aurora Gold Mines is contractually obligated to utilize local content in its operations and this was intended not just to cover employment, but also the use of local services.
By bringing in its own aircraft, the company is shortchanging local operators in the aviation sector by denying them business which they otherwise would have obtained.
The contract signed between the Government of Guyana (GOG) and Aurora Gold Mines (AGM) obligates the mining company to: “use all reasonable efforts to give preference, to the maximum extent compatible with efficient operations and good mining practices using standards applicable in the international mining industry, to products and services produced and offered in Guyana, provided these are offered at competitive terms and conditions.”
The company is required to give preference to Guyanese subcontractors in respect of transportation. Aviation is part of the transportation sector. The company is required to ask its contractors and their subcontractors to follow these policies.”
The company is also required to submit a report to the Government setting forth (i) the relative percentages of foreign-sourced and Guyanese-sourced goods and services used by the Company, (ii) measures taken to enhance the role of Guyanese-sourced goods and services in the Project and (iii), measures to be implemented so as to improve such performance.”
The Ministry of Natural Resources, which has oversight over the mining sector, must now announce whether the company has been in compliance with its local content obligations, and whether in any form or manner the ministry granted approval to the company to go ahead and purchase its own aircraft, knowing fully well the implications for local content.
Guyanese are huffing and puffing over a mistake that a local company made in one of its advertisements, which sought to disarrange the map of Guyana.
But only Kaieteur News seems to be huffing and puffing over that ‘eye pass’ of an explanation which is coming from a mouthpiece of the Aurora Gold Mines in relation to its downscaling of the use of local aviation services. The ‘eye pass’ must end.
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