The usual suspects must not be allowed to get their claws on the oil revenues

Nov 21, 2021 Features / Columnists, Peeping Tom

Kaieteur News – The people of Guyana are behaving as if the country is drowning in oil wealth. The fact is that since production started we got less than US$200M in the first year and it is expected to reach about US$500M by the end of this year.
In the meanwhile we failed to undertake an audit of US$9.5 B or about 20 times of total oil take. Guyana is therefore not dripping in oil wealth, not with the pitiful two percent royalties, a US$18M as a signing bonus and the other 12.5 percent which we are supposed to earn after expenses.
Thus far, the government has not touched any of the deposits from the petroleum revenues. All the billions which are being doled out for relief measures, for infrastructure projects and for paying public servants have been derived from taxes.
Guyanese are overtaxed. It is hoped that when the government does decide to dip into the oil revenues that it will consider using a portion for budget support so as to reduce the heavy taxation burden on the citizenry.
But as much as the government is yet to dip into the Natural Resources Fund, the PP/PC has to be looked at with eagle’s eyes so as to ensure that they do not use their legislative majority in the National Assembly to make withdrawals from the Fund that are fiscally, and economically unsustainable.
The PPP/C is signalling that it is likely to make a deep gouge into the oil revenues to finance some of its ambitious infrastructure projects. Despite claiming that the Amaila Falls Hydroelectric Project and the new Demerara River Bridge will be financed by private investors, the experience with the flawed models of the Berbice River Bridge and the Marriott Hotel are cause for concern when it comes to the PPP/C and mega projects.
The oil revenues are low. Guyana is not going to become a rich oil producing state unless the Production Sharing Agreement is renegotiated. And the PPP/C has no intention of renegotiating the sordid deal which the APNU+AFC signed.
Guyanese therefore must counterbalance the expectations which they might have been led to believe. The revenues from oil will come in drizzles not in any great gush. And it is important that Guyanese demand that this money be invested wisely and any investment project, using oil revenues, is done with full transparency.
The usual suspects must not be allowed to get their claws on the oil revenues. If they do, then the future of Guyana will go further down the drain.
Unfortunately, time is not on our side. The oil companies want to plunder the oil revenues as fast as they can. And the PPP/C supports the position that it should maximise oil production in the shortest possible time. The PPP/C does not see the oil industry as a long term investment and it is for this reason that Guyanese should be most concerned, because right now there are limited safeguards to protect Guyana from the tentacles of the oil companies.
Guyana needs a depletion policy which does not accord with the philosophy that oil production should be maximised in the shortest possible time. If that happens, under the lopsided deal which was signed, then within 10 years, Guyana’s future would have been expropriated by the oil companies and before Guyana realises the danger, the oil companies would have already decommissioned their operations and bailed out with the hog’s share of our oil reserves.
The government must immediately be pressured to activate the Natural Resources Fund (NRF). It has had enough time to amend the law which it said was going to amend to ensure greater transparency. It has not done so and it is hoped that greater transparency is not replaced by the freedom of the PPP/C to dip into the Fund as it pleases.
Vice President, Bharrat Jagdeo has said that the government, of which he is the third in command, should be “managed in a professional manner; in an arm’s length way from political interference.” But the changes are yet to be implemented to ensure this arm’s length and independent management of the NRF.
In the meantime, Guyanese must disabuse themselves of the idea that riches are coming their way. It is not – not with the deal which was signed and which is not being renegotiated. And not with the usual suspects eyeing-up the NRF.
(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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