GCCI calls out contract bundling in Guyana’s oil sector

…urges Local Content Secretariat to take action

Guyana’s nascent oil and gas sector and its local content have taken off and grown since oil was first found. However, the Georgetown Chamber of Commerce & Industry (GCCI) has warned that companies continue to attempt to use loopholes, including contract bundling.
On Wednesday, GCCI said it is taking note of recurrent contract bundling practices within Guyana’s petroleum sector. According to the chamber, its members are expressing their disapproval of this practice.
Contract bundling is the consolidation of the procurement of various goods and services under one contract. According to GCCI, this has seemingly become a practice of companies within the petroleum sector.
“Contracts are being solicited for expressions of interest (EOI) and requests for information (RFI) under one umbrella by various players in the industry. The sum-effect of this practice is that micro, small and medium-sized enterprises (MSMEs) are unable to compete in the space, since the ‘bundling’ practice will set an artificial barrier to their participation,” the GCCI has said.
“Apart from its obvious hindrance to MSMEs wishing to service the sector, the Chamber believes that contract bundling works against the spirit and intent of Guyana’s Local Content Act (2021), thereby defeating the objectives of the Act as they relate to Private Sector development,” the GCCI has said.

Take action
According to the GCCI, its members are calling on the Local Content Secretariat of the Ministry of Natural Resources to examine this practice and its harmful effects on the full operationalisation of the Local Content Act, and by extension, the expansion of Private Sector development in Guyana.
President Dr Irfaan Ali has already said that his Government has to continuously review the Local Content legislation in order to address the loopholes that foreign companies use to manipulate the systems in place to ensure that Guyanese benefit from the oil and gas sector.

It has previously been disclosed that despite the Local Content Act, oil and gas companies continue to come up with new ways to bypass the law. According to Vice President Bharrat Jagdeo, companies have now taken to using their junior Guyanese staff to fill up the legally-mandated quota for senior management staff, all while the junior staff continues to collect their original salaries.
Asked previously about how his Government intends to deal with violators of the Local Content Act, President Ali told Guyana Times that there are a number of ways to crack down on such manipulating acts.
“You know in any system people look for loopholes, but there is a number of ways in which you can crack down on this. For someone to sign up a document as a partner in an international company or a large company that is doing different size or volumes of work, they have to have some amount of shareholding, and they have to prove where they get their money from to get the shareholding. They have to show beneficial interest; so, there are ways.
“There are ways in which the different institutions in the country can actually go after those who try to abuse a system or just try to use loopholes to just satisfy the criteria,” the Head of State had told reporters.
Moreover, President Ali has also hinted at the possibility of further strengthening the Local Content legislation to clamp down on such loopholes.
“There is continuous analysis of the laws. We are young in this, we have just passed the Local Government legislation, so, definitely, they will be continuously reviewed. There will be continuous analysis to deal with loopholes and to deal with areas in which people think they can manipulate,” the President indicated.
Guyana passed its Local Content laws in December 2021, and those detail a series of measures geared towards ensuring that Guyanese and locally-owned businesses benefit from the oil and gas sector.