Thursday, March 8, 2012

Procurement system hampering metallurgical sector

The special law for procurement that applies to strategic sectors in Ecuador is hampering the metallurgical industry's participation in local project development, the director of national metalworking industries association Fedimetal, Guillermo Pavón, told

"This law establishes that companies define how they will carry out contracting or purchasing according to internal regulations," Pavón said.

Companies from the power generation and transmission, hydrocarbons, roads and mining sectors - where the metal-mechanics industry has the most opportunities - can use the special regulations and make purchases or contract services according to their own criteria.

"The national [domestic] industry doesn't necessarily get priority and in general they sign contracts with foreign companies," Pavón said.

PUBLIC POLICY

On the other side are companies that do not benefit from the special law and instead carry out purchasing and contracting through the public procurement portal, which offers the domestic industry more opportunity to participate.

"The issue is that although a lot of investments are part of this system, it does not cover the biggest investments that are related to the strategic sectors," Pavón said.

However, Ecuador's government recently announced that it will facilitate the participation of the metallurgical industry in projects in the strategic sectors.

"Everything that can be done locally, will be done," foreign minister Ricardo Patiño was quoted as saying by local press. Patiño added that the metallurgical industry has to participate in local projects and that only the products that are not produced in the country will be imported.

The major sector companies are Andec, Adelca and Novacero, which together produce 480,000t/y. Ecuador consumes 1.2Mt/y of long and flat steel.