Hydro-Québec wants more Quebec content

By 2021, 84% of purchases of government corporate goods will be made in Quebec. This proportion rose to 97% for services. (Photo: Hydro-Quebec)

Hydro-Québec is in the process of fundamentally changing its procurement strategy, as the government corporation wants a larger share of its purchases of goods (supplies, components, equipment, etc.) to be made or assembled in Province.

This project came about because Quebec has favored local purchases since the beginning of the pandemic, and the crisis in global supply chains has shown organizations the importance of having local suppliers, especially for strategic purchases. .

In 2021, the value of Hydro-Québec’s supplies will reach C $ 3.7 billion. According to data from the Crown corporation, 84% of purchases of goods are made in Quebec – this proportion has risen to 97% for services.

However, this proportion of 84% does not mean that 84% of these products were made or assembled in Quebec, but instead Hydro-Quebec purchased them from a company with an address in the province.

Also, some suppliers with one or more points of sale in Quebec may, for example, sell equipment that they themselves have imported from Europe, the United States or China.

Local purchases, but not “Made in Quebec”

In an interview with “Les Affaires”, Mario Albert, Senior Director of Strategic Procurement at Hydro-Québec, estimated that approximately 30% of these goods (of the 84% purchased in the province) are produced or developed in Quebec.

So this proportion of 30% is what the government corporation wants to increase in the coming years (and not the total amount of $ 3.7 billion) to take advantage of its local economic cycles — such as, in addition here, its approach over the decades.

“We have instructed a consulting firm to assess the full potential in Quebec to determine how far we can go. Is the full potential 40%, 50%or 60%, for example? explained Mario Albert.

Hydro-Québec will know this information by the end of 2022, when the company has submitted its report. Thereafter, the Crown corporation devotes itself until 2026 to reach the full potential of the products made or developed here.

Mario Albert pointed out that Hydro-Québec’s new supply strategy is largely based on the concept of import substitution-a theme often addressed by Deals over the years (read “Bye Bye Asia, welcome back to Quebec!” again).

Import substitution is not based on a logic of protectionism or economic nationalism, but rather on a logic in which it is profitable and economically viable to produce products on a local basis rather than importing them.

Mario Albert wants to clarify this: there is no question here for Hydro-Québec of losing money or compromising the reliability of equipment to create more economic spinoffs in Québec.

Also, companies that are drooling over the idea of ​​winning a contract just because they can make or assemble goods in Quebec are likely to be disillusioned, because they also need to be competitive and offer high-quality products. that product.

Hydro-Quebec will calculate an “acceptable financial balance sheet”

In its new purchase policy, Hydro-Québec will also calculate the “acceptable financial equilibrium” for each purchase category, based on overall economic benefits for Quebec.

“If we find a replacement product in Quebec and that requires additional costs, we will pay for it if the economic spinoffs are at least equal,” Mario Albert insisted.

In some cases, the state corporation may agree to lose money, if local supply is really “strategic” for its activities, Mario Albert defined.

Moreover, Hydro-Québec must also consider commercial agreements to which Québec and Canada are bound, such as the Canadian Free Trade Agreement. (between Canadian provinces) or the Comprehensive Economic and Trade Agreement (CETA) with the European Union.

These agreements mean that the energy producer must respect the rules regarding public contracts – purchases by governments and their state corporations – and open them out of competition in certain situations (including value of contracts).

Mario Albert wants to be reassured on this subject. He stressed that Hydro-Québec’s new supply strategy could be deployed within the framework of this regulation-which does not include so-called strategic purchases-without significant impact.

“Of our annual purchases of $ 3.7 billion, approximately $ 600 million is subject to trade agreements. It must be considered to reach its full potential, ”he said.

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