Pres. Ali lashes out at critics in Republic address

Feb 24, 2022 News

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– but fails to deal with problems in oil sector, controversial mega projects

Kaieteur News – President Irfaan Ali on Tuesday night used his 52nd Republic Day speech, to lash out against critics of his government, saying while his administration welcomes criticisms these discussions must not be based on selfish agenda, biasness, perception, propaganda, and feelings.

The flag raising ceremony was held at Public Buildings -home of the Parliament of Guyana. Ali’s remarks seem to be aimed at civil society and other stakeholders who in recent times have been critical of his government’s decision making including its reluctance to renegotiate the heavily criticized “lopsided” Production Sharing Agreement (PSA) Guyana signed onto with American oil giant, Exxon Mobil. Additionally, citizens haves been critical of his government’s failure to bring the oil giant to the table to secure full-coverage insurance for the Stabroek Block operations. Additionally, Ali’s government has been chided for raiding the Natural Resource Fund (NRF) and also its handling of several multi-billion dollar projects like the, Gas-to-Energy, Amaila Falls Hydro project, the Demerara Harbour Bridge and others.
Only last week, on the sidelines of the International Energy Conference held at the Marriott Hotel, citizens staged daily protests calling for action regarding the PSA with ExxonMobil among other issues.
But in his Republic Day message, instead of addressing these matters, the Guyanese leader highlighted 10 areas in which he said Guyanese must understand their role, responsibility, and function. He stated that citizens must address these 10 things at a personal level, and, “ultimately, at a country level if we are to pursue the right blend of character and traits that will make us a successful people.”
None of the ten things include the lopsided deal with ExxonMobil and the lack of full coverage insurance for the company’s Stabroek Block operations. His 10 things are: attitude, character, narrative, values and belief system, objectivity, realistic, achievable targets, governance system, country positioning and people.
The President said, “From the inception, let me be clear, I and my Government are supportive of constructive criticism. To advance our ‘One Guyana’, as a society, we must have healthy debate, exchange of views and critical examination of policies, programmes, initiatives and plans.”
However, President Ali stated that these discussions must not be based on selfish agenda, biasness, perception, propaganda, and feelings. Instead, he said they must be, “firmly rooted in facts, and a pragmatic understanding of what is required in this rapidly changing Guyana.”
All of the issues citizens have been agitating about are achievable with the right political will and love for country, citizens have repeatedly argued.

RENEGOTIATION
As it relates to the Stabroek Block PSA, Guyana’s Vice President, Dr. Bharrat Jagdeo had repeatedly bashed the then APNU+AFC administration for the poorly renegotiated Stabroek Block PSA. He has even been quoted in the media as saying that the agreement which was signed with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), Hess Corporation and CNOOC Petroleum Limited, is a “contract that would harm us for decades into the future” and even accused the APNU+AFC of having “sold our patrimony” to Exxon. However, the Vice President is not the only one who has criticised the deal. The PSA has faced heavy criticism, from both local and regional actors. Minister of Legal Affairs and Attorney General (AG), Anil Nandlall, is also on record calling the PSA, one of the most lopsided agreements signed in the country’s history. However, while being aware of how lopsided the Stabroek PSA is and that the agreement can in fact be renegotiated – the government has no intention of renegotiating this contract which, if corrected could mean more for Guyana.
Guyana’s VP, is on record as saying contracts are sacrosanct, must be respected and that the ExxonMobil has a right to make money on its investment.
On the sidelines of a January 2020 campaign rally at Anna Regina in Essequibo, Region Three, Reuters had reported that President Ali informed that an Ali-led PPP/C government would “keep the Exxon contract intact” but review and push for renegotiation of others signed after 2015.
The article quoted Ali as saying that Exxon was a pioneer investor here and “a different case” which he would not look at for a renegotiation, should he become president. “Exxon was a pioneering investment,” Reuters quoted Ali as saying. “But those that came after that time they were not pioneering, so they have to be examined in totality,” he added.
Senior Minister, within the Office of the President with responsibility for Finance, Dr. Ashni Singh, has in the past skirted the question of whether Guyana was getting a fair share of its revenue from its oil deals, to instead say, that what Guyana gets is already dictated by the contract and that, “We have to work with them and to make the best of them.”
However, the provision obtains at Article 13.2 of the PSA but comes with the caveat — the renegotiations and happens only with a signed written agreement between all of the parties involved. According to that provision in the PSA, commonly referred to as the contract, “This Agreement shall not be amended or modified in respect except by written agreement entered into by all the parties which shall state the date upon which the amendment or modifications shall become effective.”
Former Head of Guyana’s Environmental Protection Agency (EPA), Dr. Vincent Adams, had pointed to the provision and suggested the fact it exists in the PSA, is indicative of the fact it can be renegotiated.

INSURANCE
On the issue of full coverage insurance, Ali and his government have acknowledged in the past how important this social security benefit in the lives of many. To avoid putting yourself in debt and to safeguard one’s self, most people ensure they secure insurance for themselves and loved ones. It is against this background that the government has been criticised for approving new oil fields for ExxonMobil and its partners without first securing full-coverage insurance to protect the country in the oil and gas sector.
Recently, ExxonMobil announced that it has commenced oil production at Guyana’s second offshore development area called Liza Phase Two in the Stabroek Block. Guyana would have to spend heavily if an oil spill or any other disaster should occur at any of ExxonMobil’s approved projects, due to the fact that the country remains without comprehensive insurance coverage from Stabroek Block operators; ExxonMobil, Hess and CNOOC/NEXEN.
In fact, what Guyana does have, is an agreement with Exxon’s subsidiary, EEPGL – but that company has little assets, so little that it would not be able to carry the cost of any disaster that could occur in the Stabroek Block area, which would leave Guyana to bear the costs.
It is along these lines that Dr. Jagdeo, is reported in the media on February 10, 2021, as saying that he believes that Exxon and its partners should be the ones accepting liability for such disasters; the current administration has received no commitment from ExxonMobil detailing this. However, one year later this is not in writing.
Later in the year, the Vice President is reported in the media as saying that the government is working to secure up to US$2B from ExxonMobil to cover any damage that may result from the US$9B Yellowtail Project, the fourth to be developed in the prolific Stabroek Block.
As the pussyfooting on full coverage insurance continues, Jagdeo, during one of his recent press conference shifted the responsibility for full coverage insurance from Exxon to the Environmental Protection Agency (EPA). This publication reported that when asked for an update on the full-coverage discussions with the oil operators, the Vice President shifted the attention from himself and government, by extension on the matter to say, it is the EPA that is handling this crucial insurance negotiation with Exxon.

NATURAL RESOURCE FUND
In the area of the Natural Resource (NRF) Bill 2021, the Bill which was passed in the National Assembly in December 2021, was heavily criticised for provisions which stated 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 realising an inclusive green economy.”
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 of how often Natural Resource Funds become easily mismanaged, and the perpetrators go unpunished.

MULTI-BILLION PROJECTS
Moreover, the government has also been criticised for the multi-billion dollar projects that will be coming on stream. For the gas-to-shore project, it was first touted as a US$900M project inclusive of a gas pipeline, a gas fired power plant and related processing facilities – however, Budget 2022 has confirmed this to be untrue and has in fact now confirmed a new price tag in excess of US$1.3B.
For the Amaila Falls Hydro project, in addition to agreeing to purchase all the power to be delivered to Georgetown from the 156 megawatt (MW), the Guyana Power and Light (GPL) has also agreed to assume the hydrological risks involved in the project. As such, it would mean that GPL would bear the incurred liability whenever the Amaila Falls runs dry or if the 23 square kilometres reservoir is unable to feed the hydro plant. This is according to Project Head, Winston Brassington, who provided an update on the project for stakeholders at the recently concluded Energy Conference and Expo, venue at the Marriott Hotel in Kingston.
According to Brassington, the new iteration of the 165MW project will be coming in cheaper than its 2012 price tag, when the then project developers—the Blackstone Group—walked away. At the time, the reported price was pegged in excess of US$1B but, according to Brassington, this time around, the project is earmarked to cost some US$700M. There are several other risks to this project which the Guyanese citizens would have to bear should there be any problem.

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