Give the people free electricity!

Jan 30, 2020 Features / Columnists, Peeping Tom

What is the matter with Jan Mangal, the former Petroleum Adviser to President David Granger? Jan Mangal has asked the government to publish the economic model for the Stabroek Block projects. What economic model is he referring to? There is no economic model.
The matter has never been seriously considered. It is not a priority of the government, which can hardly develop a model for its economy much less to draft a highly technical economic model for Stabroek Block projects.
Asking the government to develop an economic model for the Stabroek Block projects is like asking its members to study rocket science. It is beyond the capabilities of the government. They do not have the skill-sets to undertake such a task.
For the government to develop such a model, it would have to hire an overseas consultant, and that person would have to be paid big bucks. There is no guarantee that any model that person would develop would not be favourable to ExxonMobil and her partners.
Guyana could not even write its own Green State Development Strategy. The government is paying persons super salaries, and yet had to ask the United Nations Environmental Programme (UNEP) to write the strategy.
The document is available online. It belongs in the rubbish bin. The government has not yet laid it in the National Assembly for debate. It is doubtful whether it will ever see the light of day. UNEP has butchered the green vision of President Granger.
Guyana is not interested in any economic model for the development of the Stabroek Block. As far as the authorities are concerned, the agreement with Exxon is a done deal, and there is nothing more which can be done, but to await the oil revenues.
The government is not interested in any model which will determine the rate at which the estimated eight billion barrels will be extracted and the terms under which it will be done. The government is waiting to spend the oil revenues. And it does not need an economic model to do this either. It will simply spend as it has done.
The issue of the tax holidays is a moot point, most of the large investors in Guyana enjoy tax holidays. There is no need to complicate the investment by seeking to vary what has become standard.
The taxes forgone by tax holidays cannot be counted as tax losses, because without the investment there would be no taxes. Of greater concern is why the government has to pay the taxes owed by Exxon. This is an awkward clause in the agreement.
But Guyana did not know better. It never negotiated an agreement of that magnitude, and it did not consult with the Opposition on the agreement, even though the agreement is a matter of long term national importance, and one which should go beyond partisan politics.
Guyanese do not need the IMF or the IDB to remind them that the high GDP growth the country will enjoy from this year will not be reflected in corresponding increases in internal wealth. Most of the growth will go outside; it will not filter back into the economy.
What will filter back are the oil revenues and this is the prime concern of the government. They are more interested in how to spend this money rather than develop any long-term model about drafting fiscal terms for the development of the Stabroek Block.
The people have to press now for conditional benefits, because if they do not, the money is going to be spent on infrastructural projects which will benefit a handful of rich contractors. I have suggested before, some things which can be done to benefit the people, including waiving the debt of university graduates and tripling the pay of teachers, police and nurses.
I have an even better suggestion. The government should grant free electricity up to 250kw per household. This measure would ensure that all persons benefit, but more so those who use small amounts of electricity. Placing a cap on 250kw will promote conservation, because any usage above this will attract fees.
The G$60B which the government will receive this year in oil revenues is sufficient to pay GPL to grant free electricity to all consumers up to a limit of 250kw per month.
Guyana was never ready for oil. The oil discovered is in deep waters. But the government is also in deep waters trying to understand what it needs to do to prepare for first oil. The government is treading water. It has accepted the agreement which was signed with Exxon as being a done deal and one which it has to live with.
It hired an environmentalist to head the Energy Department and an energy specialist to head the environmental department. This arrangement is working to the satisfaction of the government, so why does anyone now want to burden the government with something which is harder than calculus.