By Vishani Ragobeer
ExxonMobil, the oil giant that is producing oil and gas offshore Guyana, has spent more than US $540 million (or about G$113 billion) procuring goods and services from Guyanese businesses since 2015.
This was spent on more than 800 local suppliers, according to Alistair Routledge, the President of ExxonMobil Guyana. He spoke at the Annual Awards and Gala Dinner of the Georgetown Chamber of Commerce and Industry (GCCI) on Thursday night.
The money spent by the company adds to the funds Guyana garners in royalties and from the sale from its share of the oil produced. Routledge also said that there are more than 3,200 Guyanese who support the company’s exploration and production activities.
Importantly, though, the News Room has received complaints from several local companies, which have confirmed that ExxonMobil and its subcontractors routinely demand that businesses agree to receive their payments 60-90 days after providing their goods and services.
Compounding this requirement, the vendors are expected to fund the costs incurred by the execution of the contracted work, including paying payroll, taxes, and other overheads, and are only permitted to submit invoices after the work is completed.
This protracted delay between delivery of goods and services and payment receipt puts Guyanese businesses at a disadvantage because they are also forced to pay the opportunity cost of having their capital tied up awaiting reimbursement from oil and gas players – when it could have otherwise been used to finance other profitable ventures during this 90-day period.
When engaged by the News Room recently, Vice President Dr Bharrat Jagdeo said that this extended payment period is a concern he shared for years even when he was the Leader of the Opposition.
Importantly, however, Dr Jagdeo said that the forthcoming Local Content legislation will provide a crucial carve-out for local companies.
On Thursday, at the same event, the Vice President announced that this legislation will be tabled in the National Assembly next week. This legislation is expected to integrate more Guyanese into the oil and gas sector and associated businesses while allowing for the crucial transfer of knowledge and skills.
Dr. Jagdeo, however, pointed out that there needs to be a balance in the legislation to promote Guyanese interests without disincentivising foreign investors.
Similarly, Routledge said that there needs to be a “win-win dynamic” for international and local companies in the development of the sector since both stakeholders are necessary for development.
“International companies need to feel welcome and can generate some value for their investment in technology and knowledge transfer,” Routledge said.
