WHAT HAS THE GOVERNMENT DONE?

Oct 18, 2015 Features / Columnists, Peeping Tom

There have been reports in the media that Guyana has shifted to sourcing a greater amount of its fuel supplies from Trinidad and Tobago. There has been no public announcement of this arrangement and the public has not awakened from its infatuation with the new administration to recognize the danger that this move, if indeed it is true, represents for the economic interests of Guyana.

It would have been a mistake, of no mean order, for Guyana to have acted in a precipitate manner to source less quantities of oil from Venezuela. Guyana should not be abandoning the Venezuelan oil market.

The Petro Caribe deal is a good deal for Guyana. It allows Guyana to purchase oil on concessionary terms and on credit. Guyana in turn satisfies its debt to Venezuela by supplying rice. The rice market with Venezuela is the most important market for Guyana. It offers a better price and for large quantities of rice than any of the other markets.

Trinidad is not going to offer such an arrangement. They will most likely want their money up-front and this will place greater pressures on Guyana’s foreign exchange rate which despite the slowdown in business activity continues its gradual slide. This week the selling rate for the US slid to G$212- US$1. The government needs to arrest this slide because it will increase the cost of living.

The rice agreement with Venezuela has always been a one year agreement. Each year there have been fears about it not being renewed but each year it has been renewed. There was therefore no need for any rash action on the part of Guyana to the threats that the deal will not be renewed.

If the new government did in fact begin to source greater quantities of its fuel Trinidad in an attempt to avoid its dependency on Venezuelan petrol that is a huge political mistake.

It is a mistake because of the value of the Venezuelan oil and rice deals to Guyana’s economy. Every country should keep its options open and Guyana has always done this in relation to its oil imports. It has always been highly dependent on certain sources but it has never been totally dependent. Oil can be sourced at time from any part of the world but not credit or barter for oil. There was no need for panic that if Venezuela pulled the plug from Guyana that we would be in a problem. That has never been the case.

What has always presented a problem for Guyana is the financing of its petroleum imports. The Petro Caribe has been a good deal for Guyana because of its financing arrangements. Guyana should never have taken the action that it has reportedly taken and attempted to shift imports away from Venezuela.

Guyana is not hurting Venezuela by doing this. It is hurting itself because there is a rice-for-oil deal with Venezuela and Guyana needs that rice market more than Venezuela needs Guyana to buy oil.

This past week there have been reports that Venezuela has inked a rice deal with Suriname. That latter country is a major rice producer and if they displace Guyana from the Venezuelan market, the rice industry in Guyana is doomed.

The government therefore must explain whether there is any truth in the reports that earlier this year it opted to source more of its fuel supplies from Trinidad. If this is the case, it is will be Guyana and Guyana alone which will have to take responsibility for any retaliatory action from Venezuela to wit the ending of the rice- for-oil deal.

The fact that Guyana and Venezuela are at loggerheads because of Venezuela’s continued claims to Guyana’s territory does not mean that Guyana should have tried to reduce its imports from Venezuela. Guyana needs the rice market.

Finding another attractive market for rice is not going to be as easy as finding another country to supply Guyana with oil. It does not work that way.

We can only hope that the new government has not permanently endangered Guyana’s national interest by its reported attempts to buy more oil from Trinidad rather than trying to continue to promote friendly trade relations with Venezuela in spite of the territorial claim.

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