The Story within the Story… Of oil contracts, 2017 and a new year

Dec 31, 2017 News

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By Leonard Gildarie

This would be our last engagement for the year. It has been a roller-coaster one and as we enter a brand new one tomorrow, it will be filled with hopes, but from all indications, it will be a tough one by any measure.

The year 2017 has also been a challenging one for the media as well. Quite a few colleagues have moved on and there are just not a lot of folks who want to enter an arena that is so highly demanding… taxing…with so little reward, except the changes that come as a result of our work.

When the ruling Coalition entered office, it was riding on calls from the populace for change. People believed that the former administration dropped the ball. At the local government level, there had been no elections for over two decades and little kings and queens were born to dictate, with little oversight to assess their performance in the various NDCs.

There were of course projects in which questions abound…Amaila, the Berbice Bridge, Marriott, and a number of privatisations.

I have difficulty understanding anyone defending the Berbice Bridge financing or the Marriott configuration. How could Guyana put up 60 or 70 percent of the monies and land yet hand control to a few, some of them unknowns, for a mere 10 or 20 percent stake?

It is like you and your friend entering into a business arrangement. You put up $70 and your friend $30. Yet your friend wants you to pledge the office, the car and the business and make him boss and if anything goes wrong, he has the first lien on the business.

These were but some of the reasoning that landed the PPP/C in trouble during its last term, leading to the prorogation of Parliament.

So it was that the previous administration fell out of favour with Guyana, but still managed to command almost half of the votes. I would not say they did not do well for Guyana during the last two decades prior to 2015. We have made significant strides, but somehow lost the way by refusing or just not listening to the complaints of our people.

The Granger-led administration hit the ground running in May 2015 with immediate news from Venezuela that the oil ExxonMobil struck belongs to them.

Guyana Goldfields, investing hundreds of millions of US dollars in its mines, was then faced with a complaint filed by Venezuela to the Canadian authorities. The land they were given to mine, in Region Seven, is also being claimed by our Spanish-speaking neighbours.

There were problems also with sugar, with GuySuCo announcing that it had no monies.

UNHAPPINESS

The administration set about its reorganisation plan. The budgets that followed, except for the recent one, were largely concentrating on broadening the tax base. It was not totally unexpected…a small percentage of businesses and workers were paying the taxes for the rest of Guyana.

Of course, there was immediate unhappiness at some of the tax measures. It was hurting the pockets of hundreds of businesses who were operating below the radar and paying little taxes or none at all.

Personally, I believed that while necessary, those tax measures happened too quickly.

However, the administration made it clear that it is the intention to even the playing field and then gradually reduce VAT and other taxes as the dust settles.

Well, we will see how that goes. We must pay our taxes.

At the city level, there was wide support for the scrapping of the planned parking meter project. I sincerely endorse any plans to clean up our city and introduce orderliness.

There was significant rainfall recently, but Georgetown and its environs were spared from major flooding despite a few communities reporting of water accumulation.

I will be the first to laud the Ministry of Public Infrastructure. Quite a few roads were repaved and driving in the city is much easier now, despite the congestion. The cleaning of major waterways has helped too. I like the orderliness around Stabroek Market, but something has to be done about the traffic bottleneck south of the Parliament Buildings.

We need structured parking, but not the project in the configuration as set out by City Council. There was clearly a seeming rush at the last minute to force the project down the throats of Guyanese. The authorities will have to help City Council on that one.

Rice and gold have both done well despite the latter’s fall in declarations. Rains and uncertainty in the gold sector would have contributed to the declaration target for gold not being reached. Smuggling from what I am hearing played a major role too.

But higher gold prices have helped in the foreign currency earnings, pushing it higher than last year.

New rice markets, like Cuba and Mexico, have boosted the confidence of farmers, and there were talks that rice from Suriname had to be imported into Guyana for millers to meet quotas in overseas markets.

At the level of Parliament, there should be widespread disgust in the happenings. Ask the man in the street and he will probably tell you that it is all a show.

We have to take seriously our representation of the people. It is a privilege that has to be honoured.

I believe that all Guyana, want our representatives to be serious and not follow a show that has been scripted. We will speak more on this. Suffice to say, a repeat of this year’s performance in the National Assembly, where more work should have been done, would surely be a sad indictment of our people.

This past week, there were developments in our foray into the oil world.

We have been clamouring for the release of the ExxonMobil contract. It has been released. I am pleased. Kaieteur News has led the way in bringing the pressure.

The administration says it has listened to the people.

The release of the contract is by no means an ordinary event. It represents a shift in thinking. The voices of the people are indeed powerful. It also meant that the administration is not unwilling to listen, indeed a good sign. It is a welcome departure from the plain “no” that we had become accustomed to.

OIL AND SUGAR

I sat Friday and listened carefully while Ministers Joseph Harmon and Raphael Trotman briefed the media on the contract. I liked the language and tone from them.

We have not gotten the best contract. We really could have received more in a signature bonus from ExxonMobil. But the affairs leading up to the negotiations of an oil deal have to be taken into consideration.

Minister Trotman made it clear that when it came to what Guyana was going to get from the Liza-1 offshore operations, there was little that this administration could have done. There was simply no legal basis for a review and renegotiation. The contract clauses say so. I can’t fault ExxonMobil. I can’t fault any government that signed the deal.

According to the ministers, in clear language, ExxonMobil came and explored when few entities were willing to spend the monies. It is hundreds of millions of US dollars.

The reasons for hesitancy have nothing to do with potential oil reserves we had. Rather, the risks were strictly the foreign threats.

First, we faced Suriname’s eviction of a CGX rig. Then, Venezuela’s gunboats in 2013 forced a vessel controlled by US-owned Anadarko Petroleum Corporation to abandon its oil research activities. So there would have been hesitancy.

According to the ministers, Guyana managed to get ExxonMobil to give an extra percent royalty and annual grants to help build our capacity.

The administration’s hesitancy to be forthright on the challenges faced with ExxonMobil’s arrangement signed under the previous administrations would be understandable. There was diplomatic relations to think of.

Refusing to go ahead with ExxonMobil would be an unthinkable option. Future forecasts, based on green energy alternatives, say that demand for fossil fuel will drop in the 2030s. Prices will be affected negatively in this scenario, making oil production and exploration less viable.

So we are faced with a simple question. Do we scrap the deal altogether and be forced with the legal fallout that can have implications on future explorations and investors’ confidence, or do we go ahead and introduce tough systems to ensure that ExxonMobil does the right thing? We have to put systems in place to ensure we receive our due.

At the level of the sugar sector, we have 4,000 workers from Skeldon, Rose Hall and Enmore now out of jobs. From all indications, a Special Purpose Unit (SPU) of Government will take those three estates and run them until investors are found.

Government has been discussing the issue, engaging both GuySuCo and the SPU, on what happens now. We have to carefully consider the situation and let this be a priority. For thousands of sugar workers, they know of nothing else except the estates. The severance pay has to be found soonest.

We are not the first country facing decisions like these. We would not be the last.

Sugar’s impact in communities goes real deep.

That aside, judging from the Christmas crowds in the city and the shopping for the holidays, the love by Guyanese has not waned. I believe that we did well.

Guyanese did what Guyanese know best…enjoyed themselves. We are that kind of people.

The boat is at the falls’ edge at the moment. It is decision time. There are tough decisions to be made in the new year, and there will be no quarter given to the administration.

A prosperous New Year!

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