PPP/C setting stage for corruption, borrowing frenzy, and spending sprees

Dec 25, 2021 News

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Dear Reader, in light of the economic impact caused by the COVID-19 pandemic, our publisher, with you in mind, has taken the decision to extend our weekly review of some of our major stories in their entirety.

– can withdraw any amount as it sees fit for emergency

– puts no jail time for abuse of mechanism

Kaieteur News – The PPP/C administration has proposed in the amended Natural Resource Fund (NRF) legislation, various methods of calculations for the withdrawal of the nation’s oil dollars. But if there is a major natural disaster, the government is proposing to give itself the power to override those rules in place and withdraw any amount it deems fit for the said emergency.
The amended law states that the Minister must however ensure the sum gets Parliament’s blessings and shall provide documents to the House explaining the gravity of the major natural disaster and its impact on the environment, and why the specific withdrawal was required and the projects it would be used to finance. The Minister would also be required to provide a table showing the current fiscal year of the withdrawal requested for emergency and the withdrawal from the fund approved in the annual budget.
In the draft legislation, a major natural disaster includes an earthquake, flood, hurricane or other disaster caused by the natural processes of the earth that has such a severe impact in the environment and the living conditions of the population or part of the population that in the opinion of the Minister, additional public spending in the excess of the amount that can be financed by the ceiling calculator is required to ameliorate the impact on the population and the environment.
Importantly, there is no provision that caters for any abuse of this “emergency” mechanism.
According to the draft legislation, the purpose of the NRF is to manage the natural resource wealth of Guyana for the present and the future benefit of the people in an effective and efficient manner by ensuring that volatility in natural resource revenues does not lead to volatile public spending; ensuring the natural resource revenues do not lead to a loss of economic competitiveness; fairly transferring natural resource wealth across generations to ensure that future generations benefit; and using the natural resource wealth to finance national development priorities including any initiative aimed at realising an inclusive green economy.
Furthermore, powers of overall management of the fund rests with a Board of Directors whose three to five members will be appointed by the President. That board will also determine the investment mandate of the fund.
Caribbean organisations object to Yellowtail EIA
-cite lack of consultations with Region on oil spill risks

Now that the Environmental Protection Agency (EPA) has officially closed off the public submissions phase for ExxonMobil’s fourth project, the Yellowtail development Environmental Impact Assessment (EIA), organisations as well as concerned experts have been coming forward to let the Guyanese public hear their voices as well.
In fact, a group of Caribbean organizations, including the Caribbean Coastal Area Management (C-CAM) Foundation, The Jamaica Fish Sanctuary Network, Jamaica Environment Trust, Institute for Small Islands, Fishermen and Friends of the Sea and Freedom Imaginaries, recently submitted a letter to Kaieteur News in which representatives complained that Exxon’s Consultant, the Environmental Resources Management (ERM), has violated international laws by failing to consult them on the likely impacts of the project, even though the EIA clearly outlines the dangers they are exposed to.
Section 9.24 of the EIA document states, “The planned project activities are not predicted to have any measureable “transboundary impacts”, (i.e. impacts outside the Guyana (Exclusive Economic Zone) EEZ. All predicted impacts from planned Project activities will occur within the Guyana EEZ. However, there is the potential for transboundary impacts to result from unplanned events that may occur, such as oil spills.”
A release from a loss-of-well control event over 30 days, according to the document, is likely to have impact on over a dozen Caribbean nations. “…there is the potential for oil to reach portions of Trinidad and Tobago, Venezuela, Aruba, Bonaire, Curaçao, Barbados, St. Lucia, Grenada, St. Vincent and the Grenadines, the Dominican Republic, Haiti, and Jamaica,” the EIA details.
Furthermore, the document notes that impacts on resources and receptors in these other countries would be similar to those Guyana would encounter.
These include “(i) impairment of the quality of the natural environment or any use that can be made of it; (ii) injury or damage to property or to plant or animal life; (iii) harm or material discomfort to any person; (iv) an adverse effect on the health of any person; (v) impairment of the safety of any person; (vi) rendering any property or plant or animal life unfit for use by human or unfit for its role in the ecosystem, (vii) loss of enjoyment of normal use of property; and (viii) interference with the normal conduct of business” as is highlighted in Section Four of the EIA.
But in addition to these, ERM said that some additional resources could potentially be affected such as corals.
As a consequence, the organisations have argued that the Government of Guyana, Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), and its British and Chinese partners have been aware of possible transboundary impacts of a potential deep well oil spill, since the conduct of the first EIA for the Liza 1 development in 2017, yet the countries remain unaware of the dangers they are exposed to as a result of this project.
The representatives in the joint letter said, “Except for efforts to develop a MOU with Trinidad and Tobago, neither the Government of Guyana nor EEPGL have alerted our governments with the specifics of the risk shown in the oil spill modelling or invited them to consult, thus enabling them to consult internally with directed affected parties. The proposed approach in the Yellowtail EIA of engaging us as potential transboundary victims only when a crisis is upon us is prejudicial against our interests. Among other things, it deprives us of the opportunity to participate in preventative efforts and it fails to allow for a fair process for establishing ecological and socio-economic baselines as the basis for damage claims. It is, in fact, a clear violation of our rights under international law”.
The Inter-American Court of Human Rights, in its 2017 advisory opinion on “The Environment and Human Rights” summarised the status of international law on this point in paragraph 196, which states: “Consequently, the Court concludes that States have the obligation to notify other potentially affected States when they become aware that an activity planned within their jurisdiction could result in a risk of significant transboundary harm. This notice must be timely, before the planned activity is carried out, and must include all relevant information. This duty arises when the State of origin becomes aware of the potential risk, either before or as a result of the environmental impact assessment. Carrying out environmental impact assessments requires time and resources, so in order to ensure that potentially affected States are able to take the appropriate steps, States of origin are required to give this notification as soon as possible, without prejudice to the information transmitted being completed with the results of the environmental impact assessment when this has been concluded.”
As noted by the Inter-American Court in para 189, this duty “extends to every case in which there is a possibility of significant transboundary environmental harm … as a result of activities planned by a State or by private individuals with State authorisation. In such cases, notification is usually the first step towards facilitating cooperation and also permits compliance with the duty of prevention [of environmental harm].”
In this regard, the organisations agreed that to date, all of the EIAs conducted by ERM, since 2018, have identified the possibility of significant transboundary harm. Yet, all the EIAs conducted by ERM have failed to identify Guyana’s legal obligations to notify and consult with potential transboundary victims before a project is undertaken.
On the other hand, the groups said that they were also not pleased that ERM’s oil spill modelling, “which was done with an unrealistic worst-case scenario that heavily favours the company at an underestimated 30-day spill window”, when the Macondo deep water well took 87 days to control, “and at the very least this sets the precedent for a worst-case scenario”.
The organisations added that ERM has been in fact copying and pasting sections of their previous EIAs into this new document, without considering whether or not those assessments were done to honour the steps it had outlined regarding potential transboundary victims.
The document now says that “In the event that there is an oil spill incident that impacts areas outside the Guyana Exclusive Economic Zone, EEPGL—with support and approval from the Government of Guyana—will work closely with representatives for the respective locations to: Coordinate oil spill response operations and communication between different command posts in the region; Create a spill-specific transboundary workgroup to manage waste from a product release—including identifying waste-handling locations in the impacted regions and managing commercial and legal issues; Work with nominated spill response vessel owners/operators to identify places of refuge in the impacted regions where vessels could go for repairs and assistance; Determine how EEPGL and the impacted regional stakeholders can work together during a spill response to allow equipment and personnel to move to assist in a spill response outside the region while still retaining a core level of response readiness within the jurisdictions; Determine spill-specific financial liability during a response to a transboundary event; and on a spill-specific basis, work with local communities within the impacted areas to raise awareness of oil spill planning and preparations”.
During the Yellowtail EIA Consultation, held on November 11, 2021, Exxon’s Consultant, ERM, was questioned as to why these countries were not consulted when they stand to be impacted. An ERM representative responded by saying that the firm was guided by Guyanese laws.

MONDAY
PPP/C proposes no penalties or jail time for misuse of oil money
In the Natural Resource Fund (NRF) Bill 2021, the People’s Progressive Party / Civic (PPP/C) administration has proposed several penalties for an official who discloses confidential information or provides misleading data about the nation’s oil money. Noticeably absent however, is a fine or jail time for anyone found guilty of abusing or misappropriating the oil revenues.
Under Part VIII of the Bill which deals with penalties and offences, a person who gives information that is materially false or misleading or knowingly includes or permits to be included, in any report or document, information that is materially false or misleading, commits an offence and is liable on conviction on indictment to a fine of $10M and to imprisonment for five years.
A person who fails to comply with any obligation to publish information provided for in this Act, or leads someone else to fail to comply with or hinders or leads someone else to hinder the compliance with, the obligation commits an offence and is liable to be fined $5M and 10 years in jail.
The Bill goes onto state that a person who, directly or indirectly, hinders or leads someone else to hinder the exercise of powers by an external auditor commits an office and can be fined $5M and be made to serve three years behind bars. Furthermore, a person who discloses official information in contravention of the provisions of the Act commits an office and can be fined $5M and sent to jail for three years.
There is also a section for liability of legal entities. The Bill states that legal persons, corporations or any other legal entities are liable for contraventions provided for in this part when committed by its organs or representatives in its name and in the collective interest. The proposed legislation states that liability is excluded where the agent has acted against expressed orders or instructions properly issued. It further notes that the liability of the entities mentioned does not exclude the individual liability of their respective agents. It adds, “The entities mentioned in Subsection 1 are jointly and severally liable for the payment of any fine or compensation or for the fulfillment of any obligations derived from the facts or with incidence on matters covered by the scope of this Act. The provisions included in this part are without prejudice to criminal and civil liability under applicable law.”
It is significant to note that the current NRF legislation which the NRF Bill will replace, does not have any punishment for the abuse of the oil fund. When Guyana had pursued the creation of its first NRF legislation back in 2018, it was warned to have clear penalties in place for the abuse of the oil fund. This advice was provided by the Natural Resource Governance Institute (NRGI) which also cited numerous examples from around the world on how often Natural Resource Funds become easily mismanaged, and the perpetrators go unpunished.
The 1Malaysia Development Berhad (1MDB) fund, established in 2009, has proven to be a major source of alleged corruption and mismanagement. Designed to attract investment into Malaysia by forming joint ventures with foreign firms, 1MDB ended up being in over US$11 billion of debt by 2014. Among its more suspect transactions are a US$1 billion investment in a Saudi oil company in 2009 which has gone missing; funds that were diverted in 2012 from an Abu Dhabi state fund to a firm in the British Virgin Islands (a secrecy jurisdiction); and US$4 billion that has been misappropriated from Malaysian state firms. Malaysia, the U.S., Switzerland, Singapore and the U.K. are still trying to unravel the web of corruption and money laundering schemes that are related to the fund and robbed current and future generations of their wealth.
The Azerbaijani and Iranian funds are other examples of extra-budgetary funds which have been used to fund the legacy projects of political parties instead of being prudently saved for future generations. In Azerbaijan, for instance, government authorities have used the State Oil Fund (SOFAZ) to directly finance strategic government projects such as the railway between Azerbaijan, Georgia and Turkey. These expenditure items were not subject to the same reporting or public procurement requirements as those financed through the regular budget process, nor were they subject to as much parliamentary oversight.
In Iran, the country’s US$40 billion National Development Fund provided loans to private-sector companies, cooperatives and economic enterprises owned by non-governmental institutions through agent banks. While the fund managers did not provide information on the specific investments, news reports revealed where they actually went. Importantly, the executive directly controlled the fund and therefore some decisions bypassed normal budgetary and parliamentary procedures.
Taking the foregoing into account, among other cases of blatant mismanagement, Guyana was urged to have “clear consequences for malfeasance.”

Norton, new Leader of PNC/R
– Shurwayne Holder elected Chairman

Aubrey Norton has been declared the new leader of the Peoples National Congress Reform (PNC/R) Party, after securing more than 70 percent of the total votes cast for the position.
The announcement was made on Sunday afternoon, as was promised by Vincent Alexander, who functioned as the Chief Election Officer (CEO) for the Party’s 21st Biennial Delegates Congress.
Norton will be replacing the Party’s incumbent leader, David Granger, who did not contest. He however defeated the incumbent Opposition Leader, Joseph Harmon as well as Dr. Richard Van-West Charles.
Alexander told reporters at a virtual press briefing that the election process saw a voter turn-out of 1,209 in total. Some 3000 delegates were registered to vote. The three candidates who were running for the position of Party Leader were Dr. Richard Van-West Charles, Joseph Harmon and Aubrey Norton who secured 64, 245 and 900 respectively.
Meanwhile, out of those who contested for the post of Chairperson, Shurwayne Holder was the clear choice. He received 407 votes while Roysdale Forde secured 256, Amanza Walton-Desir 217, Gary Best 156, Aubrey Norton 55, Sharma Solomon 36, Simona Broomes 13, Dawn Hastings-Williams 5 and Mervyn Williams4. Holder will be replacing the incumbent Chair, Volda Lawrence, who did not contest, although nominated.
One of the two Vice Chair positions was safely secured by Elizabeth Williams Niles with 470 votes, while the position of second Vice Chair saw Christopher Jones and Viceroy Jordan receiving equal number of votes – 381.
The CEO explained that the party will later announce how they proceed with this development. A total of 12 party members were vying for the position, including former Minister, Annette Ferguson with 279 votes, Darren Wade 166, Sharma Solomon 126, Dawn Hastings 107, Aubrey Norton and Simona Broomes with 82, Mervyn Williams 48 and Ubraj Narine 47.
The election process also allowed for a Treasurer to be selected by party members. Mohammed Faaiz Mursaline emerged as the winner with 404 votes. The other candidates, Dr. Karen Cummings secured 303 votes; Ivelaw Henry, 41 votes; Vanessa Kissoon, 83 votes; Derrick Lawrence, 67 votes; Elson Low, 116; Ubraj Narine, 144 votes; and Daniel Seeram, 303 votes.
When it comes to the Central Executive members, up to the time of the announcement, Alexander said votes were still being tabulated for the more than 123 candidates of which 15 will be selected. Alexander dismissed claims made on social media, leading up to the announcement, that the few hours delay was allowing for a negotiation to take place, of who the next leader will be.
In fact, the CEO told reporters that the team were merely seeking to deliver accurate results. He discounted those claims as “just another imaginative moment” of the accuser. The election saw almost a full participation of voters in North America, with 53 out of 55 submitting votes. The installation of the new leader is expected to take place Monday.

TUESDAY
Natural Resource Fund Bill 2021…
Ali Govt. wants power to empty oil account for unrestricted spending on emergencies, “green economy” projects
According to the Natural Resource Fund Bill 2021, the PPP/C Government is proposing that the oil revenues be used to satisfy four specific purposes.
Part II of the Bill outlines these to be: ensuring that volatility in revenues does not lead to volatile public spending; ensuring that oil revenues do not lead to loss of economic competitiveness; fairly transferring natural resource wealth across generations; and most importantly, “using natural resource wealth to finance national development priorities including any initiative aimed at realizing an inclusive green economy.”
The Bill also highlights that the overall management of the Fund along with the preparation of its Investment Mandate, will be a Board of Directors which shall constitute no less than three and no more than five members appointed by the President.
Notably, all withdrawals from the fund shall be deposited into the Consolidated Fund and shall be used only to finance: national development priorities including “any initiative aimed at realizing an inclusive green economy and essential projects that are directly related to ameliorating the effect of a major disaster.”
Furthermore, in the fiscal year that the Act comes into operation, PPP/C wants the ceiling on the amount that may be withdrawn to be the total balance accumulated in the account described as “The Natural EResource Fund” as at the date that the Act comes into operation.
On Monday, Kaieteur News highlighted in its review of the NRF Bill that there is a noticeable absence of consequences for the misuse or abuse of the oil money that is withdrawn for emergencies or green economy initiatives.
When Guyana had pursued the creation of its first NRF legislation back in 2018, it was warned to have clear penalties or the fund could run the risk of failing to serve current and future generations. This advice was provided by the Natural Resource Governance Institute (NRGI), which also cited numerous examples from around the world on how often Natural Resource Funds become easily mismanaged, and the perpetrators go unpunished.
The 1Malaysia Development Berhad (1MDB) fund, established in 2009, has proven to be a major source of alleged corruption and mismanagement. Designed to attract investment into Malaysia by forming joint ventures with foreign firms, 1MDB ended up being in over US$11 billion of debt by 2014. Among its more suspect transactions are a US$1 billion investment in a Saudi oil company in 2009 which has gone missing; funds that were diverted in 2012 from an Abu Dhabi state fund to a firm in the British Virgin Islands (a secrecy jurisdiction); and US$4 billion that has been misappropriated from Malaysian state firms. Malaysia, the U.S., Switzerland, Singapore and the U.K. are still trying to unravel the web of corruption and money laundering schemes that are related to the fund and robbed current and future generations of their wealth.
The Azerbaijani and Iranian funds are other examples of extra-budgetary funds, which have been used to fund the legacy projects of political parties instead of being prudently saved for future generations. In Azerbaijan, for instance, government authorities have used the State Oil Fund (SOFAZ) to directly finance strategic government projects, such as the railway between Azerbaijan, Georgia and Turkey. These expenditure items were not subject to the same reporting or public procurement requirements as those financed through the regular budget process, nor were they subject to as much parliamentary oversight.
In Iran, that country’s US$40 billion National Development Fund provided loans to private-sector companies, cooperatives and economic enterprises owned by non-governmental institutions through agent banks. While the fund managers did not provide information on the specific investments, news reports revealed where they actually went. Importantly, the executive directly controlled the fund and, therefore, some decisions bypassed normal budgetary and parliamentary procedures.
Taking the foregoing into account, among other cases of blatant mismanagement, Guyana was urged to have “clear consequences for malfeasance.”

Questions swirl over cost, need for Linden-Mabura Road
– Lall warns against graft, says funds should be spent on developing coastal road network

For years, political leaders here have spoken about the need for a reliable road link between Guyana and Brazil and the trail from Linden to Lethem has been earmarked as the perfect place to start.
Though several studies have been completed for such a project in the past, the PPP/C Government seems to be moving with great alacrity to commence work with the first phase being from Linden-Mabura.
The CDB which is funding the project in collaboration with the United Kingdom had said that the upgrading of this portion of the largely unpaved road from Linden to Mabura Hill is more than an infrastructure project. The Bank said it will include social safeguards that will ensure residents benefit from the road development; and environmental protections, to preserve the ecosystem. According to the Bank, the project will also include activities to mitigate risks associated with increased development, which will build social resilience in the communities along the corridor and preserve the rights of vulnerable groups.
As an additional benefit, the CDB said at a time when the COVID-19 pandemic has exacerbated existing poverty in the country, the road project will provide direct employment for both the short-term and long-term in a region characterised by high unemployment. It will also advance sustainable livelihoods of small and medium enterprises by facilitating access to financing, markets, and capacity-building services for residents in the project area, including Indigenous people. The project will promote improved social resilience of communities through capacity-building sessions. This will help to mitigate risks that could result from increased construction activity and heightened development of the area. The sessions will increase awareness about critical social issues, such as gender equality, the rights of Indigenous peoples, and the welfare of people with disabilities, children, youth, and the elderly. The project will also include an essential road safety component to protect users and communities along the route.
Spend funds on other projects
However, speaking on one of his weekly radio programmes, Kaieteur News Publisher, Glenn Lall questioned the cost of the project, as well its economic viability. Lall believes that costal road links are of far greater importance at present, given the increase in road traffic. “Everybody knows that the roads in this country are insufficient to handle and take care of the traffic, everybody knows also that this country has been on a development pathway for the past couple of years. Roads have become one of the major downfall in Guyana. At present, it is causing a tremendous dent towards development, you can’t leave your office to do anything and get back to work in an hour, ½ of a day finish in the traffic alone. It has become a nightmare, it has become a sick everyday right across this land, more so the East Coast, the West Coast, the East Bank and the West Bank of all Essequibo, Berbice and Demerara. Our leaders are clueless as to how to find a solution to this vehicular madness that has taken over this land,” Lall said.
He then pointed out that Guyana borrowed US$47M and fixed the West Coast of Demerara road, then a further US$45M to build the East Coast of Demerara highway. It borrowed US$31M for the Sheriff Street and Mandela Avenue road; spent US$13M for the Eccles to Mandela Avenue and maybe another US20M to be borrowed to connect Diamond to Eccles. “So we talking about almost US$160M of borrowed money to fix some roads. Whether we get value for money – that’s another thing, but that’s not what I am talking about here.” He said borrowing US$160M to fix the West Coast, East Coast, Sheriff Street, Diamond to Mandela will ease a great burden on the people of this country who use the roads every day, in and out the city. “I applaud the government for doing things like that, but when you hear your government borrowing US$190M to upgrade Linden to Mabura Road then one has to ask serious questions as to what is going on in this country with our lives,” Lall stated.
The newspaper publisher said he is certain that the US$190M from the United Kingdom and the CDB can do Sheriff Street, Mandela Avenue, West Coast, East Coast, Diamond to Mandela, then that US$190M can complete the East Coast, can complete the West Coast, can take Diamond to Timehri and if used in a more efficient manner, you can have a 4-lane to Crabwood Creek. “…but instead President Ali and Edghill and whoever is going to upgrade Linden/Mabura Road – you know what they going to do – if they ever carry through with this project, the Chinese would get the work, the Chinese would put two bulldozers and grade one and two places for the next 10 years and 5 more US$190M will come out of your Treasury to go there – exactly what they are doing to each and every one of us with that CJIA project,” Lall said. Lall believes that the Linden/Mabura road will be another ‘milking cow.’ He then questioned what the Linden/Lethem Road will contribute to this country, he said the US$190M can pay 38.7% increase to public servants.
The National Procurement and Tender Administration Board (NPTAB) last week opened billion-dollar bids from Brazilian and Chinese firms vying for the contract to upgrade the Linden to Mabura Hill road, a project that is Caribbean Development Bank (CDB) funded. This project is being undertaken by the Ministry of Public Works, and according to their engineer’s estimate this project is pegged at some $34,197,257,104. Those competing for the contract are China Gezhouba Group Company Limited (China), China Railway International Company Limited (China), Shandong Luqiao Group Company Limited (China), Queirozgalao (Brazil), and joint ventures Castilho (Brazil) and local company, EOCI.
In December 2020, it was announced that the CDB, the Government of Guyana and the United Kingdom Government have partnered to fund this US$190 million project, for the upgrading of approximately 121km of road from Linden to Mabura Hill to an asphaltic concrete road that would improve the connectivity between Guyana’s hinterland and the coastal areas.
According to reports, the Bank is putting US$112 million through a loan towards this project, the government is putting US$12 million, and the UK Government is putting US$66 million.
This project will represent the first phase of the much-hyped Linden/Lethem roadway, which would improve travel time to Brazil and connections to thousands of hinterland people.

WEDNESDAY
Suriname accepts insurance for oil spills only from parent companies –former Staatsolie Boss
While Suriname still has a few years to go before offshore oil production commences, it has outlined a suite of high standards for all oil companies to follow. One such principle applies to insurance for oil spills. The Dutch speaking nation has made it a practice to only accept full coverage insurance from the parent companies operating in its backyard.
Confirming as well as elucidating this industry requirement recently was former head of Staatsolie (Suriname’s National Oil Company), Mr. Rudolf Elias.
During an interview on Kaieteur Radio’s programme, Guyana’s Oil and You, Elias noted that all the companies operating in its basin are very well prepared to handle the possibility of an oil spill, not just during the oil production stage, but in exploration as well.
Elias said Suriname, and the entire oil industry, by extension, understands the importance of being well prepared, especially when one recalls the lessons of the tragic Deepwater Horizon oil spill, which occurred in April 2010 in the Gulf of Mexico on the BP-operated Macondo Prospect.
Kaieteur News previously reported that the Deepwater Horizon incident is considered to be the largest marine oil spill in the history of the petroleum industry, costing the lives of 11 men. The industrial disaster also resulted in over 4 million barrels of crude oil being spilled into the Gulf of Mexico, which disrupted an entire region’s economy, damaged fisheries and critical habitats, and brought vividly to light, the risks of deepwater drilling for oil and gas.
Elias said, therefore, “…Even if it is the daughter of the daughter of the daughter of the daughter, in the end, the parent company will have to take full responsibility…So it is always good to have the mother company be the guarantor for an event of an oil spill.”
He added, “But the oil companies are so well organized in Suriname that within moments there will be a lot of companies from Trinidad and from Houston that will be able to go to such an eventuality immediately in order to contain the spill. So I do believe that oil companies, especially the IOCs (International Oil Companies) like Exxon and whereas with Total and Apache are so responsible that if there is an oil spill they will catch it up pretty quickly.”
While Suriname has made it a nonnegotiable position to have parent companies provide insurance, in Guyana, the circumstances are vastly different.
ExxonMobil Corporation, the parent company of Esso Exploration and Production Guyana Limited (EEPGL) has steered clear of being tied to full coverage insurance for its Stabroek Block projects, which are certain to deliver multibillion dollar profits on an annual basis. Instead, it has only placed its subsidiary, (EEPGL), which has little assets, on the hook if such an eventuality occurs offshore. This is the state of affairs with its Liza Phase One, Liza Phase Two and Payara Projects.
As for its Yellowtail Project, which is projected to cost over US$9B, Vice President and local oil czar, Dr. Bharrat Jagdeo is on record saying that the government is trying to get ExxonMobil to acknowledge its obligation for insurance.
During his press conference in November, last, the Vice President specifically said, “As you know, we are constantly seeking to improve the permits and …in the one we are looking at in the Yellowtail Project, we are looking for a generic position where the parent company, ExxonMobil, will now guarantee; well we are looking at maybe up to US$2B for any damage caused here… because from the beginning there was no parent guarantee, it was implicit but…that is crucial for us as we move forward.”
Former PPP Minister demands urgent renegotiation of ‘wicked’ Exxon contract
Successfully achieving good governance policies to avoid the resource curse -Dutch Disease—is easier said than done and some symptoms of ‘Dutch Disease’ have begun to appear locally.
This is according to former Minister in the People’s Progressive Party/Civic (PPP/C) administration, Geoffrey Da Silva, who on Tuesday in a public missive lamented that “many oil-producing countries had similar good intentions like those of the PPP/C government, but they became more underdeveloped and poor because their governments early on, ignored, downplayed or denied the creeping symptoms of ‘Dutch Disease—symptoms of which are already being experienced in Guyana.
To this end, the former government minister was adamant that the Production Sharing Agreement (PSA) signed between Exxon (with its partners) and the former APNU/AFC Government of Guyana has to be changed.
Observing that the PPP/C government’s position is that they cannot renegotiate, because they have to adhere to the sanctity of contracts, Da Silva was unwavering in his position, “…until the wicked, hypocritical and onerous provisions of this PSA are renegotiated, as was done in Trinidad and Tobago and other countries, the people of Guyana will be denied the sanctity of their self-respect and well-being.”
According to DaSilva, there has to be a ‘sanctity balance’ to ensure that all Guyanese workers, farmers, the unemployed, the marginalized, the poor and the hungry experience significant improvements in the quality of their lives.
Elucidating his position within which Guyana finds itself as an oil producing nation, and its exposure to the Dutch Disease syndrome, Da Silva observed that in the domestic economic sphere, there are signs that the economy could become heavily skewed towards the oil-related sectors.
There is an increase of all kinds of imports, including raw materials and foods that could be produced in the country.
As such, to ensure balanced development in a relatively small local market, the government has to prioritize, in addition to its local content policies, the creation of an export strategy that would build effective institutions for supporting Guyanese businesses and foreign-owned companies in the non-oil sectors to expand in current foreign markets and enter into new export markets with value-added products and services, he said.
Additionally, Da Silva noted that in the financial sphere, there are indications that the government may be considering to borrow, speculatively, from the future sales of oil to finance projects.
Accordingly he cautioned, “many projects still go over deadlines with cost overruns because of poor planning (trying to rush many projects) and ineffective oversight.”
Compounding the situation, he observed that, the foreign exchange rate is appreciating and in the near future, it could negatively affect the competitiveness and export opportunities of the non-oil economic sectors.
“So far, the government has not publicly outlined how its plans to source financing over the next 10 years, how it will diversify the tax base to prevent over-dependence on oil earnings for its revenues, and how it will encourage both foreign and local investors to re-invest their earnings into the national economy,” he said.
Additionally, DaSilva noted that in a situation where many types of crimes are increasing, “there are significant wage gaps between females and males, and between political office holders and workers and farmers. The education system is unbalanced with the continuing dominance of legal and medical graduates over engineers, scientists and managers. In the health sector, there is no publicly outlined programme to end the stunted growth of many children in hinterland areas.
He noted too, that in the political sphere, there are few genuine consultations with the public and to date, initiatives have not been prioritized to build political stability and overcome the never-ending inter-ethnic suspicions.
Da Silva did note that, “in spite of these concerns, there are positive signs that a significant majority of Guyanese representing all ethnicities, gender, ages, classes and different abilities, want to believe that the intended policies of the PPP/C can make Guyana a better place, provided it acts as a national government and all its members and supporters, not just its leaders, genuinely and humbly reach out with courage to all grassroots communities to overcome the political stalemate and debunk ethnic fears and stereotypes.”

THURSDAY
Army pays $298M in electricity bills, register accounts for only $180M
…Auditor General unable to verify unaccounted millions

The Auditor General’s Report for 2020 has highlighted a number of glaring deficiencies in the processes used by various government agencies in the accounting of its allocated funds annually through their respective budgets.
Among the red flags highlighted by the Auditor General in his scrutiny of the financial records for the Guyana Defence Force was its payment for utilities for which in excess of $100M could not be accounted for.
The Audit Report documented that for 2020, amounts totalling $331.816M were expended under this account area, however, a Utility Register was not maintained for telephone charges. It was noted that a print-out of telephone numbers and amounts paid were placed in file jackets on a monthly basis, “thus, verification was a tedious and time consuming process.”
Further, a comparison of the payments with the Electricity and Water Charges Registers revealed differences. “As a result, we could not determine consumption as per account.”
According to the Audit Office, while it was reflected as payments in the sum of 298.4M for electricity, the register could only account for 180.6M.
As such, some $117.7 said to be payments made for electricity, could not be verified.
This situation also obtained with, payments made for water. The Audit Office said, while $42.5M was said to be spent for payments, the register detailed $37.1M, meaning an excess of $5M for water charges could not be accounted for. It was noted that the GDF’s response to the query was that the Utility Register for Telephone Charges was previously maintained; however, since GTT ceased to provide paper bills and is now submitting statement of accounts, the register was discontinued. However, this anomaly was noted, and steps have been taken to correct this deficiency. The Audit Office has since recommended that the Administration of the Defence Force ensure its Utility Registers are properly maintained, including the recording of all pertinent information.

Govt. discards bids received for gas-to-shore project
…says not obligated to accept any offer, reserves right to negotiate with private partner

The Guyana Government has not only discarded the first set of proposals it received in September this year, for aspects of the gas to shore initiative, but also has completely re-designed the scope of works, to now instead build an integrated gas fired power generation plant, in addition to a Natural Gas Liquids (NGL) factory.
Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—at the time had also pre-qualified firms for the NGL plant—a process now scrapped and will have to be restarted. The revised scope of works, according to a new publication by the Ministry of Natural Resources—requesting proposals from firms to be prequalified—said, the rationale “for the combination of the Power Plant and NGL facilities, is guided by the findings of EEGPL that there will be substantial savings from combining these two facilities.”
Government through the Ministry explained that as part of the gas to Energy project it has elected, “after extensive evaluation of technical and execution factors with EEPGL—ExxonMobil Guyana—to have the two facilities be “designed and constructed together.”
As such, the Ministry has since re-invited interested parties to be prequalified to engineer, procure and construct the two integrated facilities.
Under the revised scope of works, the government says it intends to build “combined cycle turbines, multiple fuel consumption (including rich and lean natural gas [per specification to be provided upon request], Natural gas liquids and diesel) Power Plant to generate up to 300MW of power with a net 250MW delivered into the Guyana Power and Light grid at a substation located on the East bank of Demerara.”
Additionally, the project will include 230 Kilo Volt (KV) substation and back up fuel capacity.
As it relate to the NGL Plant, this is expected, under the revised scope of works, to be able to process 60 million cubic feet of natural gas per day in the first phase and up to 250 million cubic feet of gas in the second phase.
Additionally, the plant must be capable of conditioning the gas (dehydration and mercury removal) and removing heavier hydrocarbons (propane, butane, pentane plus) in liquid form.
The project according to the Ministry will be located at Hermitage, identified as part of the Wales Development Zone with some 150 acres of land allocated for its purpose.
With regards the financial aspect of the project, the only reference indicated by the Ministry is that submissions should contain the bidder’s financial ability to undertake its commitments, namely the engineer, procure and construct “these two integrated facilities.”
Government in July of this year had invited Expressions of Interest (EOI) through the Ministry of Natural Resources, which had called for Joint participation in the proposed gas-to-shore project with the government and EEEPGL.
According to that invitation, the government and EEPGL were looking for partners “in designing or utilising the outputs from an NGL (Natural Gas Liquids) / LPG (Liquefied Petroleum Gas) facility and related facilities.”
This included, according to the Ministry, design, construction, and financing of a power plant fuelled by Natural gas, where the power will be delivered into the Guyana Power and Light’s (GPL) distribution grid. This is in addition to industries that can utilise Natural gas for, “Natural gas driven developments and growth.”
This has since been integrated, and according to the new invitation, the EOIs that had been received in September last for separate components of the then, segregated project and were prequalified, can also resubmit proposals.
In its initial request, the Ministry had indicated that the decision on Wales was taken after extensive evaluation of multiple sites with ExxonMobil Guyana Limited (EEPGL).
The Wales Development Zone, it said, has been identified as the termination point for the pipeline from the Liza Area in the Stabroek Block, offshore Guyana.
The area encompasses over 14,000+ acres of land of which approximately 1,300 acres will be set aside for heavy Industry/gas-related investments.
The project, according to stakeholders, is expected to see some 27 kilometres of pipeline being buried from the Crane, West Coast Demerara (WCD) location to Wales, in addition to some 200 plus kilometres of pipeline from the Stabroek Block where the Liza Destiny Floating Production Storage and Offloading Vessel is located.
According to the administration, Wales will be the location for the termination of the gas-pipeline measuring over 225 km from the Liza Area.
Government at the time had also requested proposals “for small scale ammonia/urea, protein synthesis, cement, glass manufacture, ceramics, and other industries that rely on gas, steam, or electricity.” The Ministry in its invite did specify that government nor EEPGL “is not obligated or bound to accept or pursue any response to this document and reserves the right to pursue discussion with any company and to modify or annul the procedure under this document at any time without further direction, without thereby incurring any liability, financial or otherwise.”

FRIDAY

Guyana should set up National Oil Company to penetrate veils of distrust
…create more win-win opportunities –former Staatsolie Boss

If Guyanese authorities are desirous of strengthening the State’s oversight as well as its position as leader of its oil industry, then a National Oil Company (NOC) is the way to go, says former Head of Suriname’s NOC, Staatsolie, Mr. Rudolf Elias.
During a recent interview on Kaieteur Radio, Elias said, “I think the most important thing that Guyana should do is it should open a National Oil Company. This is not because I was the Chief Executive Officer of one but I worked there for so long and I saw the power and knowledge it afforded Suriname.”
Elias also shared his belief that a NOC would allow Guyana ample opportunities to attract its brightest minds in the Diaspora and have them serve under one roof. In streamlining universities to train persons to address gaps in the exploration, development and production cycles of the industry, Elias said this would also fortify the knowledge base needed for the NOC.
“So if you combine all this knowledge, suddenly, you will see that you have a very solid foundation,” expressed the former CEO.
He shared as well, that in having a NOC, it allows Guyana to participate in the day-to-day activities of the block. He said, in other words Guyana would essentially have a seat at the table with ExxonMobil and all other oil companies operating in its basin and would therefore have a firsthand view of how they work.
“If you understand better how they work, you would also understand better how you can approach them and how you can get the best out of what you have as a country. With participation in your own oil fields, you don’t only get knowledge from the oil companies from across the world but you now also get knowledge of the oil industry in your own country. So now you know exactly what the costs are and what the benefits are because you are participating.”
He added, “So every penny that is spent you know, every contract that goes out you have to pre-approve together with your partners so you understand a lot better what is going on and when you understand each other a lot better you make better marriages…you can make better contracts. Also for Guyana, there is no distrust anymore and you can create more win-win situations.”
He stressed that the foregoing, and more, are all possible benefits when a country has a National Oil Company.

GDF spends $3M a year repairing one vehicle
…as Audit Report flags ‘exorbitant’ maintenance costs

The record keeping and spending by the Guyana Defence Force (GDF) has raised red flags at the audit office. Documented in the Auditor General’s Report for 2021, one such instance being the case of one vehicle costing the force some $3M annually for repairs.
That vehicle, according to the audit findings, was purchased in 2017, under the then coalition, A Partnership for National Unity, Alliance for Change Government. According to the Auditor General, “some vehicles had relatively high maintenance costs. Noteworthy, is a Toyota Hilux 8th Gen. Pick-up acquired in May 2017, which had maintenance costs, of $2.931M and $2.650M in 2020 and 2019, respectively.”
It was noted that $336.154M was budgeted under the Line Item for Vehicle Spares and Services which was later supplemented with a further $6.8M in 2020, “resulting in a revised allotment of $342.954M. The Auditor general in pointing out that the total sum of $342.937M was expended, noted that two of the vehicles catered for under that allotment utilised some 4.9M for repairs in 2020.
Four of the GDF vehicles were repaired at costs between $1.5M and $2M, totaling some $6.7M while six other vehicles accounted for $7.3M in repairs for that year. Each of the 18 other vehicles accounted for had repairs undertaken at sums below $1M. In response, the Auditor General said, the Head of Budget Agency stated that among the Force’s fleet, are a number of aged vehicles which incur high maintenance costs due to workload and terrain conditions and that efforts are being made to dispose of these inefficient vehicles and acquire newer models.
To this end, the Audit Office once again recommended “that the Administration of the
Defence Force, assess the maintenance costs of its fleet of vehicles and equipment, with a view of disposing those that are uneconomical to maintain.”

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