Oil money alone will not transform Guyana

Sep 26, 2017 News

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…strong partnership between private sector and Govt. needed for sustainable development – Hughes

By Abena Rockcliffe-Campbell

“Economic growth doesn’t mean anything if it leaves the people out,” said the late American politician Jack Kemp. His comment embodies the core points made yesterday by founder member and Director of the Guyana Oil and Gas Association (GOGA), Nigel Hughes.
Hughes’ presentation was delivered at the Marriott Hotel when the Caribbean-Central American Action (CCAA) and the Inter-American Development Bank (IDB) began its two day conference.
The Conference is being held under the theme “The transformational economy: perspectives and opportunities for Guyana’s private sector.”
Hughes’ presentation was on a subtheme of the conference, “Building a base for sustainable development.”
The GOGA director spoke of the impressive opportunity for economic development that is being flaunted in Guyana’s face.
He said, however, for that opportunity to be fully taken advantage in a way that sustainable development will be the outcome, inclusion and transparency must be at the foundation of any game plan.
Hughes said that if Guyana is to strategise an approach that maps the roles to be played by all, especially the private sector, the country will immediately improve the odds of making oil a blessing and not a curse.
Hughes said that Guyana is on the cusp of a level of change rarely seen in this region, or indeed the world. He outlined the obvious benefits of the oil sector to the government, like royalties and taxes that will result in increased revenues which will in turn allow government spending to increase comfortably.
However, the majority of Hughes’ presentation focused on the role to be played by the private sector.
Noting that oil is a finite resource, Hughes questioned, “In 30 years when Liza and her little sisters are dry, where do we want to be as a nation? And, what is the role of private enterprise in getting us there?”

Hughes told the gathering that there are several case studies of states where the private sector, and by extension, sections of the populace have benefitted from the discovery of oil even though the lion’s share of the wealth is deposited into government accounts.
He noted that while Angola has suffered a lack of transparency and good governance, the country’s local content provisions are a case in point where the private sector has been able to enter into significant contracts based on the strength of the country’s local content provisions.
Hughes added, “In terms of [the] private sector engagement in the entire length of the value chain, our sister state Trinidad is case [that] we should not overlook.”
Hughes said that oil must act as a catalyst allowing the government to achieve the Sustainable Development Goals and the private sector to contribute to economic growth.
He said that key for Guyana is the need for the private sector to be an engine of growth and for the oil income to be translated into a number of vibrant new sectors.
“The state cannot do this. While the government can create an enabling environment it is the private sector that will have to create the lion’s share of the jobs and by extension the growth.”
Hughes said that with production scheduled for 2020, Guyana is about two years behind where it should be in its preparation for the new industry.
He acknowledged that the government has provided a broad framework for the development of a green economy without too many specifics.
“With this relatively untouched canvas, the private sector must chart a course which will deliver the returns and create value for the country and itself…the journey must commence with an assessment of where we are and what is possible in the short, medium, and long term.”
The GOGA Director said that the assessment which the private sector may consider undertaking, should include questions like: What impact will oil have on our currency, the exchange rate, imports and exports?
“Will the Private Sector commission a white paper on the impact of oil and the economy and what are the urgent and obvious infrastructural projects which the private sector can invest in?”
Hughes said that the creation of a transformative economy will depend on the provision of cheap energy. Hughes referenced the Minister of Natural Resources; Raphael Trotman, announcement that Exxon has indicated that there is enough gas to power a 200-megawatt liquid natural gas (LNG) plant.
He said that with the requisite feasibilities on the establishment and location of such a plant, a 200 megawatt plant would transform the dynamics of productive capacity of Guyana.
The GOGA director said too that the creation of a transformative economy must also include an examination of several options available to Guyana, including the option of Guyana’s trading in crude on the international market.
He noted that the trading of crude has its own prerequisites. These include high quality telecoms and IT support; trading tools such as ship tracking software; news services, deal capture software, risk management software and skilled workforce specific to oil trading.
Hughes then turned his attention to critical elements of a stable long term sustainable development which should be considered.
He highlighted ‘growth which is inclusion’. No region or section of society must be left behind, he said.
This, Hughes noted is the number one goal of sustainable development which is zero poverty.
Hughes said that the “the 3 T’s are also needed—Transparency, Transparency, Transparency.
He repeated the need for energy; there must be power to the people. “Economic studies have shown the transformative impact that cheap power has on the lives of all but particularly the poor.”
Affordable clean energy is another goal for sustainable development.
Hughes said also, that there must be gender equality which is another goal of sustainable development. “Our path to sustainable development and growth needs to acknowledge that women are a key driver of the Guyanese economy and form a large portion of SMEs.
Pressure must be exerted to ensure that a significant portion of contracts go to these small and medium size enterprises.
Hughes said, “Infrastructure planning and growth needs to be proactive. It’s not about fixing potholes but rather, predicting and even more importantly, driving development.”
Industry innovation and infrastructure are also sustainable development goals.
Hughes said that these goals require not only a high degree of guidance and diligence from the private sector, but also strong partnership between the private sector and government.

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