Open Letter to the World Bank and IDB

Aug 07, 2021 Features / Columnists, Peeping Tom

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Kaieteur News – The World Bank (WB) and the Inter-American Development Bank (IDB) cannot be oblivious to the adventurous and highly risky investments which the PPP/C administration is proposing in the country’s energy sector. Given the risks involved and the implications for the country, the WB and the IDB should make future assistance to Guyana conditional on the government’s willingness to undertake feasibility studies on its two flagship energy projects – the Amaila Falls Hydroelectric Project and the Gas-to-Shore Project.
These two projects are mired in controversy. There is a lack of transparency surrounding the gas-to-shore project, and the resuscitated Amaila Falls Hydroelectric Project is an attempt to revive the dead.
No feasibility study has been done in respect to the gas-to shore project. This is unacceptable considering that this project is likely to be the largest single investment project in Guyana.
The government says that studies which were undertaken during the tenure of the APNU+AFC, is the basis for moving forward with this project. However, the World Bank itself had observed that scoping studies and not feasibility studies were conducted.
Before the gas-to-shore project proceeds any further, the Bank should insist on a proper feasibility study. The WB should equally express its concern over the fact that while consultations are taking place on this project, the Government of Guyana, in its mad rush, has invited expressions of interest from investors.
The gas-to-shore project was not the brainchild of the PPP/C. It was the IDB which foisted the idea of a sustainable energy mix on the government. In one of its reports, the IDB alluded to the possibilities of associated gas being brought to shore and used for power generation, thereby allowing for a sustainable energy mix. The IDB said that such a mix could transform the country’s energy generation. It pointed to how in the short-term and medium-term, natural gas could provide the source of the baseload for the country’s energy generation, with renewables assuming a greater share over the long-term.
Transparency has been a key factor for the support, which both the World Bank and IDB provide to Guyana’s energy sector. Under the Guyana Petroleum Resources Governance and Management Project, the WB provided US$20M to Guyana to support the strengthening of the energy sector. One of the key aims of the project is the enhancement of the sector’s transparency, governance, legal, regulatory and institutional frameworks.
Similarly, the IDB’s support for the strengthening of Guyana’s energy sector is aimed at improving transparency. The IDB must demonstrate that it truly believes that transparency is a critical feature of guaranteeing optimal oil and gas sector performance.
Transparency is lacking in the governance of the country’s oil and gas sector. As this newspaper reported this week, Guyanese are yet to see any of the local content reports, which are submitted by the oil companies to the government on a quarterly basis. Nor have they seen the production reports. Nor, also, have they seen the report of the audit done into the pre-contract costs. Not being revealed also is the report prepared by Canadian consultant Alison Redford.
The WB and the IDB should demonstrate their commitment to transparency by insisting that the government be more transparent by releasing the above-mentioned reports. They should also demand a proper feasibility study before any action is taken in respect to the gas-to-shore project.
The IDB should have no problem with this latter demand. It was the IDB, which suggested the need for key studies to be done in the transition to the energy mix it proposed and which the PPP/C has uncritically adopted.
There are two other reasons why both the WB and IDB should put on pause their assistance to Guyana. The first has to do with environmental concerns and the second has to do with the financial models for these projects.
The WB’s support for the oil and gas sector was predicated on the need for legislation, which will forbid routine flaring of associated gas and for Guyana endorsing the Zero-Gas Flaring Initiative. The legislation which has been passed makes some allowance for routine flaring. In fact, Guyana is setting targets for flaring rather than outlawing it totally. Moreover, Guyana is not listed as an endorser of the Zero-Gas Flaring Initiative.
But perhaps the most important cause for pause is the return of the usual suspects and their methods. Mindful of the financial models which were developed for the Marriott Hotel and the Berbice River Bridge, the World Bank and the IDB should question how it is that even before the technical and environmental assessments have been completed, the government is moving ahead with such haste on inviting investors, and doing so without making public the financial model of the gas-to-shore project.
Glenn Lall, the publisher of this newspaper, has single-handedly led the fight for greater transparency and for a better deal for Guyana. He is now joined by a group of non-governmental organisations who are raising specific concerns about the gas-to-shore project.
In the face of this rising tide of disaffection, it is time for the World Bank and the Inter-American Development Bank to take action. They should put on hold all assistance to Guyana until the government undertakes the necessary studies and improves transparency.
(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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