Guyana is already suffering from the resource curse

Jun 07, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – As expected, the Private Sector Commission (PSC) came out with a bat in hand for the government. In its most recent statement, concerning the judgment in the case of Collins & White vs. Environmental Protection Agency, the PSC said that is profoundly concerned over the controversy surrounding the matter.

While the PSC did not state specifically where it stood on the judgment it is not difficult to hazard a guess as to which side it supports. The PSC was never expected to have joined the chorus of individuals and organizations that have hailed the judgment.

The PSC is an interested party in this controversy. ExxonMobil is a corporate member of the Private Sector Commission and it was to be expected that the PSC should have declared this interest when making this recent statement.

The PSC opted to say that it wants the legal issues clarified and an amicable settlement. The two are mutually exclusive. The clarification of the legal issues can only mean one of two things: either the oil companies have to provide full indemnity in the event of an oil spill or the existing status quo will prevail. In such circumstances, there can be no amicable settlement. This is a clear case of either the citizens of Guyana winning or they losing.

The PSC then was reported as asking all Guyanese to give serious consideration to where Guyana is today in terms of infrastructure and transformative developments. The PSC is trying to link these so-called transformative developments to the oil and gas sector.

It needs to be reminded that oil money is not a driver of infrastructural investments, at least not as yet. The major infrastructural investments including the bridge across the Demerara River and the gas-to-shore project will involve Guyana borrowing money. And the bypass roads were being planned and executed long before the first drawdown from the Natural Resource Fund.

The Bank of China had proposed to lend US$172M to help finance the bridge. That arrangement appears to have been either shelved or adjusted with the government announcing that it has entered into a financing arrangement for the bridge. The onshore infrastructure, we are told, is likely to be financed by the American Exxim Bank.

Oil revenues have not been transformative as yet. Guyana is on a borrowing spree to finance roads, hospitals and other projects. The revenues have not yet filtered down to the poor, and even small businesses cannot boast about a bonanza. It is a handful of companies whose principals belong to the bourgeois class, both local and foreign, that are reaping the hog’s share of the procurement of goods and services for the oil sector.

The PSC should be ashamed to be mentioning the billions that are being spent by Exxon in the local economy. The bulk of the spending is going to a handful of foreign multi-nationals who secured contracts before local content legislation. This column did a piece on this issue showing where the large contracts went.

The PSC cannot be myopic. It needs to appreciate also that the absence of a depletion policy is creating a nightmare for this country. In this context, it is the oil companies that are dictating the pace of exploration and production, and Guyana is granting approvals for the field development plans without considering the implications for the country’s limited infrastructure.

Guyana’s ports and road network are much too small and non-modern to effectively service this burgeoning oil and gas sector. And this is why there is such a mad scramble for riverside and ocean-front lands. And this is why so many trucks are on our roads and creating havoc. Guyana’s internal economy cannot cope with the pace of the development of the oil and gas sector. And this is why the roads are being destroyed and people are spending hours in traffic each day.

There is a terrible cost which has to be borne for these effects. The cost of fixing the infrastructure, looking after people’s health, and loss of productive hours is going to exceed what is being earned from oil.

The Private Sector Commission, therefore, needs to see the bigger picture. Oil is becoming a curse on this nation. But don’t rely only on the opinion of this column. Recall what a Jamaican academic said. He said Guyana is not going to go anywhere. He predicts Guyana will become a victim of the oil curse because of the weakness of its institutions. But it is not only the weakness of our institutions, it is also the fact that our economy and infrastructure are much too limited to cope with the oil sector’s rapid pace of development. And unfortunately, our financial gurus do not know better.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Collins & White, Environmental Protection Agency, ExxonMobil, organizations, Private Sector Commission (PSC)

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