Tuesday, December 7, 2021

Analyst says measures should be put in place to ensure local companies are paid for services in a timely manner

Must Read

OilNOW is an online-based Information and Resource Centre

A lead analyst at Americas Market Intelligence (AMI) says measures should be put in place to ensure local companies in Guyana providing services to the oil and gas sector are paid in a timely manner, particularly since access to capital continues to be a major challenge for these firms.

Arthur Deakin, Co-Director of Americas Market Intelligence (AMI) Energy Practice told OilNOW in a recent interview that there should be a maximum of 60 days processing time before a company is paid. Deakin’s remarks come at a time when local companies have been complaining about the extended time, in some cases several months, it takes for them to be paid for services rendered. For Guyanese companies already facing challenges with accessing capital in the local banking system, this places a strain on their ability to compete.

Private Sector Commission urges local firms to bridge capacity deficits for cost-recovery audits

“To help avoid capital deficiencies or lack of capital among local companies, there could be a fund set up by the government that provides short term capital loans with minimal or no interest that are paid back once the companies receive the payment from the international companies,” Deakin said.

Further, the analyst said the time companies take to pay suppliers should be clearly defined and set out in law with penalties where this is breached.

“I think it’s important to set in law and in writing the max amount of time that companies have to pay and guarantee a penalty if they don’t. I don’t know what the industry standard is in terms of the time it takes to pay, but I don’t think it should be more than 60 days after the service is finalized and invoiced,” he said.

Access to finance a key hurdle for Guyanese companies looking to secure big contracts in oil & gas – Dr. Gaskin-Peters

The Guyana government is in the process of finalizing a local content policy framework that will be taken to Parliament by the end of the year. The Georgetown Chamber of Commerce and Industry (GCCI) has been advocating for the establishment of a Local Content Commission to oversee the implementation of the policy and address concerns as they arise.

Local content commission could ensure Guyanese are not being hoodwinked – Timothy Tucker

Jerry Haar, Professor of international business at Florida International University said while he does not favour mandatory steps being taken to address payment issues, this should be discussed on a case-by-case basis.

“I think it needs to be addressed on a one-on-one individual basis and I would say that informally, if there are many complaints by local Guyanese companies with regard to [extended payment delays] that needs to be ratcheted up to a much higher level,” Haar said.


Latest News

Guyana seeing “tremendous interest” in oil block up for auction next year – Bharrat

Guyana is already seeing “tremendous interest” in one of the remaining oil blocks to be auctioned next year in...

More Articles Like This