Let all contracts for oil sector be subjected to competitive process - expert

Let all contracts for oil sector be subjected to competitive process – expert

Oct 02, 2020 News

Keeping corruption at bay…

By Kiana Wilburg

Kaieteur News – If Guyana wants to ensure that the portion of oil revenue set aside for procurement purposes is not at risk for corruption, then it would be wise to ensure the award of contracts is subjected to a competitive process that is underpinned by transparency.
This was recently noted by expert on oil sector corruption, Alexandra Gillies.

Expert on oil sector corruption, Alexandra Gillies

The specialist made these and other statements during her first appearance on Kaieteur Radio’s show, ‘Guyana’s Oil and You’.
There, the advisor to the Natural Resource Governance Institute (NRGI), was asked about key strategies the fledgling oil producer can employ to keep corruption at bay.
In response, Gillies said: “Competition helps a lot…Whenever there is a valuable business opportunity it should be awarded through a competitive process, and I think that one important aspect of the oil sector is that the opportunities to make money are not just from the company that holds the exploration or production license.”
She added: “There are other opportunities to make money across the value chain. So whether it is trading oil, providing goods and services; anytime that there is an opportunity to make money, that should be allocated through a competitive process.”
Further to this, Gillies said that local authorities would be wise to keep an eye out for anonymous shell companies as they have appeared in almost every corruption case that she has examined in the last decade.
She warned: “Whenever you see an anonymous shell company as a party to a deal then there’s another area where you should focus scrutiny and ask lots of questions.”
While oil sector procurement is an area that is vulnerable to corruption, Gillies was keen to note that the fight against fraud and crooked deals in this industry will require effective institutions across multiple branches of government.

LEARN FROM THE PAST
Along with ensuring contracts are subjected to a competitive process, Gillies cautioned that it would be in the nation’s interest to learn from the challenges oil-rich countries have faced in the past.
In this regard, the industry expert said: “This concept of resource curse came about for a reason and it’s because a lot of countries have struggled to manage the scale of oil wealth that Guyana has. I think that whether it is on corruption or managing volatile revenue or other aspects of the governance negotiating with oil companies – there’re a lot of cautionary tales and I think that they are worth learning. No country is immune from those risks at all and they are so real.”
In looking ahead, her advice to Guyana is that emphasis should be placed on not being shortsighted with the oil resources.
Gillies stressed that the nation’s politicians ought to keep the future in mind as the oil industry is becoming a riskier place because of the global transition to cleaner sources of energy.
The specialist on natural resource governance and transparency said too that the impact of the COVID-19 pandemic on the sector, which led to plummeting oil prices, has also exposed that the industry faces numerous risks and “that at any moment, the bottom can fall out on this thing.”

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