Is Guyana the next Ghana?

Jun 09, 2023 Editorial

Kaieteur News – Ghana was the talk of the oil world a few short years ago, today it stands feeble and foolish before the International Monetary Fund (IMF). It was well positioned, how well it was going to do. It is an understatement to say that Ghana has disappointed, underperformed, given the rich expectations for this well-endowed African nation. We look at Ghana bowing before the IMF, and hope that Guyana is not going to be the great disappointment that Ghana is.

Some of Ghana’s weaknesses are now exposed. In Ghana, oil companies did the minimum as far as oil exploration was concerned. Despite clear contract terms, some of the oil companies operating in Ghana engaged in serious under-exploration. This resulted in Ghana having to live with less revenues, taxes, and employment, among other valuable components. The oil contracts, and 16 were reviewed by independent non-profits, specified sanctions that were to be applied in the event of failure by the oil companies to hold up their side of the deal. What the reviewers of Ghana’s oil contracts found was that there was non-compliance on the part of oil companies, and no action taken by Ghanaian authorities.

The State Institutions responsible for levying sanctions did next to nothing. The overseers and watchdogs of Ghana gave extensions without any penalties to some of the oil companies, and looked for ways to cushion the deficiencies in their performance. For example, money for surface rentals were supposed to be paid to the Ghanian treasury by the oil companies, but when this was not done, Ghanian State Institutions looked the other way. They enforced nothing that was provided for as remedies in the oil contracts. According to contract terms in 14 active PAs (Petroleum Agreements), approximately US$923M should have been invested in exploration activities by the oil companies. Instead, a mere 2% of that amount was what occurred, which meant that Ghana lost out on over US$882M in required investment (KN January 8).

It is a huge sum, and Ghana was deprived of the benefits of that investment because its own people were asleep at the wheel, or worse still, possibly trapped into inaction by collusion and corruption. It is a fact of life that when a man is given a meter, he will grab a kilometer. What Third World countries have learnt is that show weakness before an oil company, and it will cannibalize that country while its eyes are open.

As the African Center for Energy Policy (ACEP) said, “Contractors and companies often cut corners when weak contracting systems are in place” and “corruption risks are far higher. ”The ACEP also found that there was a conspicuous “capacity gap” to the point where both State Institutions and civil society groups suffered from significant deficits relative to understanding what was before them, how to deal with the challenges surfacing. For example, the ACEP noted deficits in knowledge, the contracting process, identifying loopholes, and monitoring of contract compliance. Far too frequently, some of the gaps had to be filled by non-state actors. Or, they were looked to and approached for necessary assistance.

When we study the situation in Ghana and how it is made to pay for its weaknesses in dealing with seasoned and tricky oil companies, we come full circle back to our own Guyana. We have one State Institution that is constantly in the spotlight because it is so woefully underperforming. The Environmental Protection Agency is more about looking out for, and protecting, ExxonMobil and partners, as well as downstream oil support businesses, than prioritizing the interests of Guyanese. In fact, the PPPC Government itself seems to be at the beck and call of ExxonMobil, where its every wish is a command for our politicians. As the Government goes, so goes Guyana’s State agencies. When the PPPC Government is weak and negligent, which is most of the time, so also are the State Institutions that are controlled by it. We look at Ghana, and shrink from the thought that Guyana is following in its footsteps in dogged fashion. Now, Ghana approaches the IMF for a loan- the IMF is known as the lender of last resort. It is the end of the line for Ghana, and Guyana had better learn.

authorities, companies, Ghana, Guyana, International Monetary Fund (IMF)

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Is Guyana the next Ghana?

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