Procurement rules by oil and gas companies now under scrutiny – Local Content Secretariat, Director

The Local Content Secretariat is examining the procurement guidelines being used by companies operating in Guyana’s oil and gas sector, as several inconsistencies and a lack of standardization have raised significant concerns. This was recently noted by the Director of the Secretariat, Dr Martin Pertab.

During a recently aired interview on the Energy Perspectives Podcast, Dr Pertab said that the current variations in procurement systems across companies undermine transparency and fairness.

Dr Pertab highlighted that some companies have attempted to award contracts prematurely at the Request for Information (RFI) stage. “At an RFI stage where the information is basically more or less on a company profile… how can you decide at your level to say that this company is the right fit based on a company profile? So, what about pricing? What about experience? What about finance? What about technical capabilities?” he questioned.

Unlike government processes, which are governed by a Procurement Act, he said the oil and gas industry operates with diverse and often opaque procurement systems. Dr. Pertab explained that a proper process typically involves public tendering, shortlisting companies, requesting quotations, evaluating bids, and then awarding contracts. He stressed that bypassing these steps undermines the principles of fairness outlined in the Local Content Act.

To address this, the Secretariat intends to conduct random assessments of evaluation reports to ensure compliance. “Because in order for us to ensure there is confidence in the industry, and when we say to our locals to invest…We must have a system that is fair and transparent, that could withstand scrutiny, not for any company to come and just say, this is our company, this is our procurement process, and this is how we do things here,” Dr. Pertab stated.

Moreover, Dr Pertab emphasised the need for procurement systems to adhere to established guidelines, including criteria for pricing, technical capabilities, and local content plans.

He noted that while the Secretariat has yet to enforce any penalties under the Local Content Act, it remains committed to addressing these procurement challenges to create a more equitable environment for local businesses in the oil and gas sector. 

He affirmed, “We’re going to change it, and they must have a system in place that could withstand scrutiny.”