Chatham House warns... Be open with nation about looming challenges to oil revenue

Chatham House warns… Be open with nation about looming challenges to oil revenue

May 27, 2018 News

One of the first and most difficult challenges Governments of emerging oil countries face is managing the expectations of its people. There is no silver bullet solution for this issue.
But Chatham House, a London-based organization concerned with anti-corruption, notes that one way that is guaranteed not to work is keeping the citizenry in the dark. This is especially as it relates to how the government intends to prepare to spend and save the oil revenue to come.
Chatham House made this pellucid at one of its meetings with 15 emerging oil countries. Guyana was part of that session. There, Chatham House officials stressed that honesty is needed regarding the realities facing the country and the factors that can have an impact on oil revenues.
Chatham House said there is a need for Governments to be more forthcoming about the steep drop in global oil and gas prices that threaten to dramatically impact countries that have staked significant economic hopes on new projects as an engine for economic development.
Providing further context, the officials explained that the commodities boom that began in 2004 spurred a wave of new investments in exploration and development, as the potential value of new discoveries rose and complex projects that would have previously been uneconomical became viable.
The boom led to announcements of major new projects in countries including Guyana, Ghana, Tanzania, and Uganda. Chatham House said that with these announcements came a flood of citizen expectations about the transformative power of the hydrocarbon industry.
It said that managing these public expectations is one of the toughest challenges that Governments of various hotspots face now that prices have declined by 45 percent. Understanding this big picture, Chatham House said it brought together public officials from 15 emerging producers to discuss the implications of the price drop on their strategies to save and spend oil revenue in the future.
The forum presented no ‘catch-all’ solution, but a common element permeated many comments, “the importance of being upfront with citizens about looming challenges”.
The Organization said, “Honesty is critical in the wake of falling prices, even when the reality is bitter because it helps manage expectations. A government can’t wait for people to ask you for the full picture, you have to give it to the public proactively.”
Among the suggested communication priorities were frank discussions about price uncertainty and potential project delays, as well as what they may mean for projections of public revenues.

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Chatham House warns… Be open with nation about looming challenges to oil revenue

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