Local companies struggling to get in on oil contracts ...owners complain about late payments, bundling of services

Local companies struggling to get in on oil contracts …owners complain about late payments, bundling of services

May 25, 2022 News

By Davina Bagot
Kaieteur News – Minister of Natural Resources, Vickram Bharrat has put oil companies on notice that the Government of Guyana will not tolerate the shortchanging of citizens in their own country after it was brought to the attention of the administration complaints of unfair competition and other issues in the industry.

He made these and other remarks on Tuesday as the ministry hosted the first consultation on the Local Content Legislation, passed in December last year.
Bharrat listed a number of issues he said are raised with him daily, while signaling to the oil companies present that it would be a hard task to “fool us”. He reminded that while he is aware of the fact that they are here to make a profit, it is of equal importance that Guyanese benefit in the process.

Minister of Natural Resources, Vickram Bharrat delivering remarks during the consultations

To this end, he explained that local businesses have complained that oil companies have been bundling services for catering, security, garbage collection and other technical offshore support systems as part of one contract. This, Bharrat said, has been posing significant challenge to locals, as they are burdened to offer a service they are not registered to. In fact, this often lends to the oil company failing to achieve the local content targets. To ensure that the breach of the fresh law is not the outcome, the Minister urged that the practice be stopped.

Another sore issue that has been particularly stifling local businesses, is the late payments from oil companies for services already provided.
Bharrat pointed out that foreign companies have been failing to pay locals in a timely manner, with some payments taking as long as four months.
He explained that it is the practice here in Guyana for companies to be paid shortly after completing jobs so as to ensure the business has the resources required to start new projects. On the other hand, he said that while some companies can wait for several months to be paid, they are sometimes told that issues were encountered with the invoices, thereby forcing a longer waiting time or double the time for payments, even though the glitches in the system were not their fault.

The Minister urged the foreign companies to set a timeline for the processing of payments which will otherwise result in the ‘death’ of local contractors, effecting unfair competition as well. While addressing another matter that was brought to his attention, he lamented the fact that foreign companies have been using “middlemen” to hire employees which creates a blurred or inaccurate representation of the number of persons employed, as it seeks to meet the local content targets. “What we have been seeing recently is companies going through manpower agencies. Now we don’t have a problem with you going through manpower agencies but if you are going through manpower agencies you have to go through the Local Content Secretariat,” Bharrat said, while adding that the foreign companies have been employing Guyanese to say the 75 percent managerial staff requirement was met. It has been discovered however, that this does not reflect the total staff complement as others are being hired in by the manpower agencies or recruitment firms.

Bharrat told the oil companies that government does not wish to amend the legislations to resolve these issues, while pointing out his disappointment on the “bad faith” shown by some companies. He was keen to note, “We have no issue with manpower agencies…the issue is if companies are not actually been reporting to us their full complement of staff…and some companies have been trying to do that so that they can satisfy the requirement with the local content legislation.”
“When you do that you are shortchanging Guyanese in Guyana. You are shortchanging the people in their own country. So I’m saying that because the government of Guyana will not tolerate such behaviour…we are willing to work with any company but we must do it in good faith and we must do it in a manner that is a win-win situation and not somebody trying to out-win the other,” Bharrat warned.
Yesterday’s consultation gave local businesses as well as the foreign companies an opportunity to share some of their concerns regarding the Local Content Policy with the goal of discussing measures to address same. The issues highlighted by the Minister during his presentation had also been raised recently by the local private sector bodies.

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