Oil sector drowning in secrecy, blatant mismanagement – Opposition

Aug 15, 2023 ExxonMobil, News, Oil & Gas

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…as PPP walks back on Manifesto promises 

Kaieteur News – The political Opposition in Guyana believes the oil and gas sector is being blatantly managed by the government, with the industry drowning in secrecy as the administration now walks back on its promises made during the 2020 Elections campaign.

In an interview with Kaieteur News on Monday, Economic Advisor to the Leader of the Opposition and Spokesperson on Oil and Gas matters, Elson Low outlined that despite making a plethora of promises to the Guyanese population for better management of the petroleum industry, government has failed to act in the interest of its people.

Low noted that the government has failed the country by not raking in more revenue out of the Stabroek Block Production Sharing Agreement (PSA) with the ExxonMobil led consortium. He reminded that the Party promised to “immediately engage the oil and gas companies in better contract administration/ renegotiation.” Be that as it may, Low pointed out, “The manifesto promises renegotiation but the government has not raised a single additional dollar of revenue because it refuses to even engage the holders of Stabroek Block interests.”

Further, the Economist explained that the PPP in its 2020 Manifesto also committed to “training thousands of Guyanese” to manage the sector, however government has failed to deliver on this too as the Guyana Revenue Authority (GRA) for instance is still finding it difficult to train locals to conducts audits of the oil companies. To this end, he said, “The government must support the GRA if Guyana is to fully benefit from its oil resources.”

No transparency

The Opposition believes that the oil sector is drowning in secrecy under the People’s Progressive Party (PPP) –led government, as it has been managing the affairs of this sector behind closed doors. Of critical importance are the expenses being racked up by the oil companies on a daily basis. These bills, though submitted to government monthly are kept away from the public.

In its Manifesto, the PPP said it would “ensure that expenditures are transparently determined and go through the Parliamentary process.” It is not clear whether this was specific to the expenses of oil companies or expenditure relating to the use of funds in the Natural Resource Fund (NRF). However, the Opposition believes this is a major letdown, as there is no transparency when it comes to any oil related expenses.

According to Low, “The government’s refusal to release cost oil audits or to commit to a timeline for their completion and release also violates their manifesto promises since they said they would hold oil companies accountable and verify expenditures.”

Additionally, he noted, “There is a lack of specificity as to what exactly oil revenues are being spent on, which also violates their commitment to transparency.”

He was referring to the circumstances under which revenue from the oil and gas sector is being transferred to the public purse without a clear outline of what “national development priorities” are being funded through that source.

While still arguing the lack of transparency in the management of the sector, Low highlighted that the newly approved Petroleum Activities Bill reserves the right for government to engage in direct negotiations for the nation’s oil blocks despite the PPP promising to “ensure that blocks are competitively tendered/ auctioned.”

Low explained, “Our position is that no direct negotiations should be done without first approaching Parliament for approval of the terms of the negotiation.”

He went on to point out that the new legislation vests the Minister with excessive powers, even though its manifesto says the regulatory framework must be “independent of politicians.”

So far, the administration has updated the decades-old Petroleum legislation to provide a modern framework for the management of the sector. It has also drafted two new Production Sharing Agreements (PSAs) that will not however govern the resource-rich Stabroek Block. Additionally, government passed a new Natural Resources Fund (NRF) Act in 2021 to manage the revenues garnered from oil and gas.

Low was asked whether he believes the government should be commended for these strides. In response, he noted, “A bad law is worse than no law. That’s our core concern in several areas; so no, we don’t give them any credit for that.”

He pointed out, “One of the reasons Guyanese are not benefiting from oil resources is because the PPP has consistently broken its promises. As an example, they promised to lower the cost of living. By recovering money from even the first audit of Exxon, each Guyanese household could have benefited from hundreds of thousands of dollars in cost-of-living relief. On the other hand, by demonstrating little regard for such accountability, going forward Guyanese are left with little hope of progress in their daily lives.”

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• Manifesto, oil, PPP, Promises, secrecy

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