Wednesday, December 7, 2022

Tucker says ‘contract bundling’ runs counter to spirit and intent of local content law

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Months after local content targets were enshrined in new legislation, the Guyana government is looking to remove obstacles to achieving the Local Content Act’s purpose. In some instances, government considers the bundling of contracts to be one of those inhibitors. This was communicated to contractors by Minister of Natural Resources, Vickram Bharrat during a meeting in May, and most recently, President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker, voiced concern about the practice.

Contract bundling occurs when a company groups multiple services under a single contract. Companies may employ this mechanism to be efficient and save on costs. However, some worry it could have the effect of precluding small and/or inexperienced businesses.

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Tucker has been continuously advocating for contracts to be unbundled. He told OilNOW it conflicts with the intent of the framers of Guyana’s Local Content Act. The law sets out 40 areas in separate line items, for which companies must set aside contracts for Guyanese companies and Guyanese nationals.

“Let’s say you’re doing transportation,” Tucker told OilNOW. “You would have gotten your drivers, defensive training, insurance, new trucks and everything. But then, they want you to do custom brokerage… and the custom brokers who have gone through all the different certifications, [and so on], they cannot compete because they don’t do trucking… It’s a disadvantage to locals.”

Tucker pointed out that Jemma Langley, Head of the Permanent Local Content Committee at Trinidad’s Ministry of Energy and Energy Industries, has said that unbundling of contracts in the oil and gas sector is key for successful local content development.

He indicated that GCCI has communicated its concerns to the Local Content Secretariat, the body that is tasked with developing and maintaining measures for the effective implementation of local content by contractors, sub-contractors and licensees.

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The Chamber has been vocal in recent weeks against practices which has the potential to reduce the amount of value which accrues to Guyana and runs counter to the spirit and intent of the Local Content Act.

In a recent statement it said local participation must entail benefits going to Guyanese business owners and the country itself. GCCI said it wishes to “repudiate any enterprise or citizen that seeks to exploit the local content framework by operating under the guise of local participation when this is not, in fact, the reality of the operation.”

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