Money talks and we know what walks!

Jan 07, 2018 Features / Columnists, Peeping Tom

Can you imagine in any part of the world an elected official telling citizens that instead of clamouring for more money from an oil deal, they should be more concerned as to how we will manage the oil resource? In any other part of the world, any person making such a statement would have been greeted with a storm of protests – but not in Guyana, where politicians make the most outrageous statements and get away with it.
This is what one official was reported to have said at the time the contract between Guyana and ExxonMobil was made public.
“It is sometimes bemusing to understand why there is this clamour for more money when in fact, we should be more concerned about how are we going to manage this resource, being less than a million; how are we going to protect this resource because there are going to be others who will want to come and share it with us, sometimes not by choice but by force. So those are the primary concerns of the Government.”
The primary concerns of the government are therefore not about ensuring Guyana receives more money, but about managing this resource better and preventing others from sharing the resources. But how well has Guyana managed this resource initially when it signs an US$18M signing bonus, a 2% royalty and 50% profit sharing after investment and expenses are deducted?
We have started out with a most controversial deal which will give Guyana peanuts for its oil wealth. Yet, Guyanese can be lectured to about not clamouring for more money
Guyanese must be concerned with what they will receive from their oil resources. It is our resources. And while we may not have the capital to develop it, this fact does not mean that we should simply accept any and every agreement, especially when the chance was available for us to make a better deal with Exxon.
The proof of any deal is what the country receives. Oil is a wasting resource. When it is gone, it is gone. It is not renewable. Guyanese therefore have every right to be concerned about what they will receive. They have every right to clamour for more money.
Yet, Guyanese are being told that because we are new to this industry there were constraints to what we can receive. We are told because Venezuela had issued decrees on our maritime space, we have gotten the best deal – we should factor all those circumstances into consideration of what we got.
So what will Guyana receive? Guyana will receive about US$300M per year from oil revenues. This is ‘chicken feed’ when compared to the massive reserve which Guyana possesses. This projected annual payment will have to be set aside for present and future uses.
This US$300M will, no doubt, go into a Sovereign Wealth Fund so that it can benefit future generations. The purpose of a Sovereign Wealth Fund is to ensure that all the monies are not used at any one time, but those sums are set aside for future generations.
Norway, an oil-rich nation, has one of the largest sovereign wealth funds in the world. Yet, it is only is allowed to draw down 4% from its Sovereign Wealth Fund. It means that if Guyana uses that same formula, we can at best only use around US$12M per year. That cannot build a bridge across the Demerara River. That amount of money cannot pay severance to displaced workers at the Guyana Sugar Corporation. It cannot give public servants, teachers and the police a 5% increase across the board.
Where therefore is this massive oil wealth that will allow for Guyanese to improve their standard of living?
Guyanese therefore have every right to question the agreement which the government signed with the oil companies developing the Stabroek block. Guyanese have to question whether the best deal was signed. Guyanese have a right to ask whether those signing sold-out Guyana for a pittance. Guyanese have a right to clamour for more money.
It is about sovereignty too. We do not want Venezuela to forcibly seize our oil. But we equally do not want the oil to be expropriated by ExxonMobil via a contract.
On Friday, another massive find was announced in the same Stabroek block. How convenient the timing of that announcement. But what does it change?
It does not change the rate of royalty; it does not remove the stabilization clause which protects the investor. It does not give Guyana a larger signing bonus. Should we not now be clamouring for more? We cannot, because of the agreement we signed.
And still we are told that we should be concerned more with how we manage the resource rather than clamouring for more money.

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