Cash-cow for cronies or a money spinner for citizens?

Jan 21, 2021 Features / Columnists, Peeping Tom

Kaieteur News – Today, I examine the criticisms that the gas-to-shore (GTS) project lacks transparency. The fact that information about the project is absent does not mean that it is not feasible; it simply means that the government has not yet facilitated the transparency needed for an informed assessment of the project’s environmental and economic soundness.
The GTS project will be the largest onshore investment. It will surpass the cost of the beleaguered Skeldon Sugar Factory. That factory ended up costing taxpayers US$180M. The political responsibility for this behemoth must be laid squarely at the feet of Vice President Bharrat Jagdeo, under whose presidency the project was developed.
Jagdeo had promised that even if he had to get personally involved, he would fix the project. It has not been fixed. Jagdeo’s involvement in that calamity may be the reason why the public is circumspect about the GTS project. For many, this is another costly and aimless excursion by Jagdeo.
It may be in President’s Ali’s interest for him to remove Jagdeo from any involvement in the project. Given Jagdeo’s track record with major projects, there is bound to be a loss of confidence in his ability to successfully execute a project of this magnitude.
The failure of the government to make known the various studies about the project will only add to the suspicion that political rather than technical considerations are behind the decision to situate the landing point for the gas pipeline and plant at Wales. Too little has been made know at this point in time, and this accounts for the reservations about the project.
When the government was planning to build the Amalia Falls Hydroelectric Facility, the developer wanted a buy-in from the Opposition. The PPP/C was forced to hold a briefing with the parliamentary Opposition in the hope that it could woo its support. This did not happen. The Opposition rejected the project; and the developer walked.
Amazingly, the PPP/C wants to resurrect this project while at the same time promising to build a gas plant. This is all the more reason why there should be greater transparency because there is no explanation as to how all this energy is going to be utilised.
The President has said that the cost of electricity is likely to be cut in half. This alone should render the project unfeasible. Given the amount of gas, which is and will eventually be produced by petroleum operations, there is no reason why the cost of energy from a natural gas plant should only be halved.
It makes no sense building a natural gas plant to reduce energy costs by 50 percent. Energy costs needs to be slashed by at least 80 percent if Guyana’s manufacturing is going to be competitive. There is no reason also why any household should have ever again to pay for electricity if such a plant is established. With such a project, there should be an abundance of energy to provide at least 300MW free to consumers.
The elephant in the room, however, is the financial model, which will be used. The government may be thinking of a public private partnership. The PPP/C’s record with this sort of arrangement is well-known. It benefits friends and cronies while using the state to finance much of the capital costs. The Marriott Hotel and the Berbice River Bridge are prime examples where a flawed financial model has benefitted syndicated and preferred investors rather than the country.
The cost of the GTS project is expected to be prohibitive. The government should offer this project to ordinary citizens. The government can finance this project by offering shares, with a guaranteed rate of return back by a state guarantee, as is the case with the GuySuCo bond, which NICIL organised.
Presently, there are tens of thousands of ordinary citizens who are receiving less than one-two percent interest on their savings in the bank. If the government can guarantee a rate of return of four percent, many of these ordinary citizens are going to be willing to invest in the project.
The small man is not going to ask for 20 percent, the rate of return, which was once touted for Amaila. They are going to settle for four percent since this is four times what most of them are receiving on their savings accounts.
In this way, the people of Guyana can be sure that the GTS project will be their own. It will not be another cash cow for cronies but rather an investment by citizens.

(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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