STOCK OPTION POOL FOR PUBLIC SERVANTS

Jan 24, 2018 Letters

The policy should also consider the long-term development of our national economic interests and the strategies to ensure that the new oil businesses that emerge from the Guyana oil projects reflect a broad-based, diverse group of Guyanese. Therefore, there is a need for Guyanese businesses to be granted exploration concessions as an essential part of local content.
Consequently, the interest of the Business Class must be aligned with the interest of Public Servants and Citizens. To encourage strategic visionary decision making, the Public Sector should be allocated a stock option pool (i.e. ownership) in Guyanese businesses that are granted exploration concessions or performance warrants for facilitating local content opportunities. Broad-based citizens’ economic empowerment should also be factored into the granting of the concession by allocating shares to our Sovereign Wealth Fund. The stock option pool proportion should be non-negotiable so that it must not become a bribe – and there should be careful rules for selection of concessionaires that weigh their capability and qualifications with other realities of our societal divisions – in other words, there must be fair participation policies to ensure inclusion that advances social cohesion.

Example 2 – Stock Option Pool for Public Servants
Some believe it is in the nation’s best interest to auction off future oil blocks. Assume that exploration licenses are auctioned off at US$50 million per block paid into our Sovereign Wealth Fund, and under the proposal, would result in US$50,000 for the Public Servant commission pool. However, with the proposed Public Servants stock option pool, granting the concession to a capable Guyanese group would result in a win-win scenario. If the stock options for the Sovereign Wealth Fund (ownership in the Guyanese Company for granting the concession) is 10% and the Guyanese group successfully builds a company with US$1 billion valuation – the Public Servants commission pool would be worth [at 5%, US$5 million (100x the benefit of auctioning commissions)]. More important, there would be broad-based citizen economic empowerment with the Sovereign Wealth Fund receiving US$100 million – money that can go towards supporting primary and secondary education or scholarships for tertiary education.

During his visit to Guyana, international Oil and Gas business executive Kola Karim pointed out that if we mandated 30% local content across the board, we would already be seeing significant benefits. For example, the first ExxonMobil Production Facility (FPSO) came at a cost of US$1.2 billion – very little of which was felt in our economy. If 30% local content was required, Exxon’s partners would have had to find Guyanese partners and invest locally. Investing in our human resources and infrastructure are already drastically altering our economy. We would have seen at least an additional US$360 million pumped into our economy since 2015. Local Companies that are able to participate in these opportunities can be required to pay the facilitators (Ministry of Business and GO-Invest) stock options or performance warrants (shares/percentages of the deals).

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