Gov’t seeking to expand local production to counter price hikes

Local content provisions are expected to generate a higher demand for Guyanese goods, like food products, but with the possibility of increased demand leading to price hikes, the government is seeking to expand in-country production.

This is according to the Minister of Natural Resources Vickram Bharrat who talked up Guyana’s energy plans at a forum held at the Baker Institute in Houston, Texas.

The Natural Resources Minister explained that targets set out in the Local Content law were carefully crafted to balance supply and demand concerns. These targets were intended to balance the services provided by Guyanese and foreign companies in the local oil and gas sector.

Unless the supply of those goods and services increases, Bharrat said that the increased demand could drive up prices.

“We’ve experienced that in small pockets around the country, in mining communities.

“You would find in those communities, the prices for basic commodities are higher than on the coast,” Bharrat explained.

Cognisant of this, the minister said that the government could not set targets that were unrealistic or that would lead to adverse consequences. He said, for example, that the local content target for food supply was 75 per cent, because the government did not want scarce food products to lead to higher prices in the marketplace for local consumers.

And Bharrat said that this is why the government is pushing local production.

“We have been pushing the other sectors, especially the agriculture sector,” he said.

He also said that the government is seeking to build much-needed infrastructure across the country, while also saving for the future. The country’s oil fund, which currently stands at some GY $150 billion, is seen as instrumental in these pursuits.

The country is also hoping to spur the growth of its manufacturing sector through the forthcoming Wales gas-to-energy project.

Through this, the government proposes to run a 135-mile pipeline from offshore Guyana to Wales, to bring in gas being produced by ExxonMobil’s operations in the prolific Stabroek Block offshore Guyana. This gas will be used, it is proposed, to fire a power plant producing 300 megawatts of electricity.