Guyana’s poor systems spell disaster for oil money

May 21, 2020 News

By Kiana Wilburg

Guyana ushers in its newfound oil wealth in an era of poor systems for governance, procurement and management that has existed for decades.
The reports from the Audit Office, the guardian of the nation’ purse, testify to this on an annual basis.
Those reports speak to numerous cases of rampant corruption and procurement breaches across ministries and regional departments.

TT Petroleum Expert, Anthony Paul

Up to last year September 2019, Auditor General, Deodat Sharma expressed dismay with the fact that the majority of his yearly recommendations to Ministries, Departments and Regions to improve systems and practices for governance and accountability are not acted on. In fact, Sharma said that 76 percent of his recommendations were not fully implemented with many of them being repeated each year. As a result of the inaction, Sharma has said that weaknesses and issues that impact negatively on Government’s governance and accountability mechanisms continue to occur.
This state of affairs remains an area of serious concern for many transparency advocates, especially when taken in context of advice recently provided by Trinidadian Energy Expert, Anthony Paul. During a recent taping of Kaieteur Radio’s Programme, “Guyana’s Oil and You”, Paul said it is critical that Guyana gets proper management systems for the expenditure of oil money; otherwise, it will risk losing significant revenue.
Further to this, Paul said that proper management systems for governance and procurement would help to ensure Guyana does not find itself in the same boat with other major oil producing nations such as Nigeria and Angola that are now at the doorsteps of international financial institutions with appeals for funding to fight the COVID-19 pandemic.
The Energy Expert, who is currently helping the government of Mozambique, said that there are several mistakes these countries made but there is a key one Guyana should pay attention to. He said, “Governments tend to track their budgets with their revenues rather than, and I would suggest, the ability to spend money efficiently and that has been a challenge in countries that have oil and gas. They have high budgets, high levels of spending and high levels of inefficiency. So I would say the lesson for Guyana is to understand the level of capacity you have to manage efficiently…”
The Trinidadian warned that high levels of spending, even on the most crucial projects, would essentially be a recipe for disaster if the weaknesses of the governance and procurement systems are left unaddressed.
Further to this, Paul said, “The local authorities also have to bear in mind that the price for oil will fluctuate. So ask yourself, what the right level of revenue expectation is and pitch your budget below that so whatever surplus you get, you can save it for rainy days like the one that is upon us.”
Using his home country as a point of reference, the Local Content Expert said that Trinidad and Tobago’s problem has never been access to revenue but rather , poor management of expenditure. He said that one of the things Trinidad’s authorities said they would do is bring legislation that would ensure the transparent management of the oil money while getting high value with contracts. He said that this unfortunately, was not done.
“Once governments do that, you know their intentions aren’t always the best. I would suggest Guyana should take its cue from this,” the international consultant concluded.