Recipe for bankruptcy

Jan 05, 2021 Editorial

Kaieteur New – In this society when a well-meaning citizen, no matter how neutral he or she may be, dares to open his/her mouth and offer a comment, or take a stand, on a controversial issue, there is the high risk of being branded – in sharp terms, sometimes vile, too – as being the worst sort of partisan. That has been the case with race and politics, and oil management and economics. In terms of the latter, this is just what an outsider, not a so-called biased Guyanese, is doing. The fact that he is a foreigner and a Caucasian one at that, only adds to his clout and authenticity.
“Gas to shore project, a recipe for bankruptcy – US Financial expert” (KN January 01). Imagine that as the main headline that greeted Guyanese on New Year’s Day. Tom Sanzillo, Director of financial analysis at the Institute for Energy Economics and Financial Analysis (IEEFA) laid it on the line with that statement about the Gas to shore project being “a recipe for bankruptcy,” when he touched upon what is a high priority project with all kinds of promises and expectations dancing in the heads of Guyanese. Like we say, if a Guyanese were to risk saying that, he could be run out of town.
“Such a venture could prove financially detrimental to Guyana, especially when one considers the nation’s weak capacity to negotiate fair deals for the country.” Since almost all local politicians are in favour of this venture, Sanzillo, the expert, is not likely to attract many friends in Guyana’s high political circles. He would have just stepped on more than one set of toes. Among them are those, who consider themselves world class experts in the field of financial deals. That may be so, but one group after another either had the wrong people at the table in deal after deal (and we speak not of oil only on this), or they thought they knew more than they actually did. Which is why in government after government, we end up with what we get, be it bauxite, gold, and now the big daddy of them all, oil. In contract talks, big or small, they seem to almost always fail us with the financial end, leaving the citizens of this country, holding the bag, and with dashed expectations.
Making clear his unfavourable position in no uncertain terms, Mr. Sanzillo noted that while there is appreciation for this country’s high desire to be involved in a gas to shore project, with its attendant benefits of making a dent in high electricity costs and frequent power failures, he had to stress that the “manner in which Guyana went about negotiating a lopsided deal for oil provides no evidence that it can confidently do otherwise for bringing gas to shore.
We at this paper have no choice but to agree wholeheartedly, though there is some embarrassment in the admission.
To present the thrusts of what Mr. Sanzillo said some more, we quote him directly: “I have to be frank about this…gives me no confidence that the country has any ability to negotiate the best price for a pipeline and other infrastructure to bring gas to shore…There is no evidence of that. In fact, one has evidence to the contrary.” We believe that this expert knows what he is talking about so strongly, so we understand “gives me no confidence” and “any ability to negotiate the best price for a pipeline” and “there is no evidence of that….”
The fact that we have tied yet another bundle with Exxon to build a pipeline and bring the gas from facility to shore means, that Guyana would have to pay the company for transporting the resource. Mr. Sanzillo has certainly enlightened us and for that we thank him. We now have to go where all of this leads inescapably. There is no question that ExxonMobil is among the best to build a pipeline and then move the gas to a shore-based facility. We know nothing of any such things, but we keep allowing Exxon to tie us up in knots.
And on each occasion that Guyana’s political people has done so, Guyanese citizens end up footing the bill. Since it is Exxon that is involved (once again) in this, the bill could be for an arm and a leg, if not more. For every time that Exxon’s name is part of the mix, we have been shafted. Our leaders allow the company to do this to us. Look carefully, just as how it is a recognized oil and gas power, so also Exxon is recognized as a world class biller with every crumb going to it.
Exxon is without equivalent, due to its American origins, in providing the necessary protective buffer for us. That is part of Guyana’s unique price in dealing with oil. And since we also owe so much to America for its recent role in electoral democracy here, dealing with Exxon on its terms is a further piece of what is becoming very costly for Guyana. If we continue like this, then we might as well all go back to focusing on our agriculture base.