One-at-a-time contractors

Dec 12, 2020 Features / Columnists, Peeping Tom

Kaieteur News – Guyana is expected to earn US$200M in oil revenues this year. This is 50 percent less than what ExxonMobil and the APNU+AFC had projected that Guyana would have earned in its first year of operation.
This revenue figure was premised on oil prices and production. The price of oil, however, fell appreciably, this year. During the early stages of the pandemic, the oil companies were paying persons to take their oil. Oil prices have since recovered but is yet to reach the US$55 on which the oil revenues are premised.
The projection for oil revenues was also based on average daily production of 120,000 barrels per day. However, for most of the year, production was well below.
All of this adds to the narrative that Guyana has been done over by the oil companies. Glenn Lall, the publisher of this newspaper, has been saying all along that Guyana has been robbed blind by the oil companies. And what he is saying makes sense because when you consider that apart from a 75 percent cap on expenditure, no-ring fencing, the reclaiming of operational and other expenses and the massive field development costs estimated at more than around US$15B; it is obvious that Guyana will only get the scraps which are thrown at our table.
The monies Guyana will make this year from oil is less than the increase the country will earn from the increases, just the increase, in gold prices. In other words, the increased revenues from gold will be more than the earnings from oil.
Government has already collected oil revenues for this year. But has not spent a cent because it needs to put certain measures in place before parliament will approve the spending. But on what will the government spend the pittance of US$200M?
The extra G$40B will prove problematic for government to spend. The PPP/C is good at making excuses. But these excuses are self-serving. They allow for the PPP/C to support a small band of contractors and to ensure that these contractors get the bulk of the large contracts in the country.
To keep the monies circulating in this closed circle, the PPP/C has said, in the past, that there is problem with absorptive capacity. This means that the economy can only utilize so much money and therefore so many projects at any one time. And therefore this is the excuse the PPP/C makes for not spending as much it ought to spend. It is essentially saying that the country does not have the capacity to absorb many large projects at the same.
But is this really so? Why should this be so when you had an Indian company build the National Stadium, a Chinese firm build the Arthur Chung Conference Centre and it was a Chinese firm too that built the Marriott Hotel?
The country can absorb the investments. What cannot happen is that the contractor friends of the PPP/C cannot undertake more than one major project at a time. They do have the planning skills to do more than one major project at a time. And this is what is stifling the development of Guyana.
It is not as if the money is not there. Oil revenues will be there but if that money falls into the hands of certain favoured contractors, Guyana will be back to one project at a time. But if the awarding of contracts is opened up, then more can be done.
The President reminds one of a character from one of the karate movies of yore. There was a man who was popularly called Hurry-Up because of his rapid-fighting style. The President seems to be in a hurry-up mood. He wants to do a number of things at the same time.
If he intends to succeed, he will need to look at the capacity of local contractors. Some of them will have to get their act together. They take much too long to get certain projects completed.
The President will have to look increasingly to foreign contractors. The problem is that the projects have to be large enough to attract them. By international standards, Guyana’s projects tend to be small.
If there is any capacity which needs to be built, it has to be in the area of construction. Guyana needs a new breed of local contractors, those who will be able to do multiple projects at the same time and complete them on time. The old guard cannot deliver; they should be shelved.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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