Importing items for retail to oil companies is not Local Content — ExxonMobil Rep.

Apr 06, 2021 News

Kaieteur News – The ExxonMobil-sponsored Centre for Local Business Development (CLBD) is currently embracing the stance that much more focus needs to be paid to the true meaning of what local content is, since simply importing an item for retail at a small mark-up profit does not count as true local content.
The position was voiced over the weekend by the CLBD Director, Dr. Natasha Gaskin-Peters, who was at the time a guest panelist on OilNow’s Local Content webinar, moderated by Chris Chapwanya.

CLBD Director, Dr. Natasha Gaskin-Peters.

According to the CLBD director, “when we think about true local content we have also to focus on the economic definition; so we have to think about leakages within our economy.”
She explained that when the oil companies spend to procure goods from a local company “if they are importing them, that is not really local content.”
The CLBD director explained that when this obtains it would mean that the majority of the money is still being leaked overseas since the companies that are supplying the oil companies would have to pay for their items outside of the country.
Dr. Gaskin-Peters used the occasion to note too, “if I am a local company and not investing in the country then it becomes a leakage.”
According to the CLBD Director, “we want to ensure that spending is not focused on pass through items; not just wholesale and retail and not just making a mark-up (profit).”
She was adamant in noting that “if we think about the spending (on local content), we also have to think about leakages.”
The director’s remarks comes on the heels of lamentations by one local company that had put in a bid for the supply of personal protective equipment, namely safety helmets, vests and gloves but was declined for want of experience.
That importer had teamed up with an international partner to supply SBM Offshore – one of ExxonMobil’s prime contractors – to supply the safety gears but was turned down.
Lamenting the state of affairs, the medium sized manufacturer said it is quite astonishing that after partnering with W. W. Grainger, Inc, an American Fortune 500 industrial supplier founded in 1927, it had thought that it would have been able to prequalify.
The local firm said it was flabbergasted to learn that it could not tender for the contract because it had no experience.
“How do you expect the small man to benefit from the sector when he can be shut out for not having experience in a sector that is new to the country? How do you expect the small man to have experience in the first place? We are being told to ready ourselves for partnerships and invest our money but when we do, we are shut out because of lack of experience. This needs to be addressed,” the local company expressed.
Senior Vice President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker, who also appeared as a guest panelist on the local content discussion, in offering a differing view on the issue, argued that the practice of importing items for retail to the oil companies could still be considered local content.
He pointed to the fact that despite items being imported, the country still benefits overall from taxes being paid and for employees earning a livelihood.
The GCCI senior vice president was reiterating the need for Guyanese to be given first preference and not be treated as window dressing.
Almost one year ago, international Energy Lawyer, Mr. J. Jay Park, had conducted a review of the provisions in the Guyana-ExxonMobil Production Sharing Agreement (PSA) for the Stabroek Block and had found that the clauses, which should ensure Guyanese get first preference for jobs and contracts in the oil sector, left much to be desired.
The terms were found to be so poor that he had given the said provisions an “F Grade.”
The renowned energy expert, who has practiced energy law for over 30 years, with specific focus on creating optimum petroleum regimes for States, had explained that the reason for such a grade is premised on the fact that the provisions would put Guyanese at a disadvantage, as they give Exxon, and its contractors, enough room to make excuses for not giving first preference in the award of contracts to local businesses.