Jagdeo should be made to answer

Sep 05, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – A Reuter’s Report, written by one Neil Marks and dated 2^nd March 2020 was entitled ‘Guyana votes for leader to manage early years of oil boom’. The report quoted Vice President Bharrat Jagdeo as saying, “They [APNU+AFC] sold us out on the oil and gas sector.”

That statement was said to have been made at a rally of PPPC supporters a few days earlier. The report went on to quote Jagdeo as saying, “Next week, when Irfaan Ali is the president, the oil companies will have to come back and talk about a fairer deal for Guyanese.”

When the PPPC did assume office five months later it refused to bring the oil companies back to the table to talk about a fairer deal.   Instead, every new field development project – 5 so far- under the Stabroek Block is attracting the same terms as before.

The PPPC promised a great many other things when it was in Opposition. It was critical of the APNU+AFC, claiming that the Coalition had rendered the Petroleum Commission non-existent and had replaced it with the Department of Energy.

The PPPC has been in office for three years. It recently tabled revised petroleum legislation. But it has failed to bring into being the Petroleum Commission. But it did promise with would be done.

Worrying concerns have been expressed as to why that Commission is not in place and why the foreign governments such as Canada, Britain and the United States, as well as the European Union are not tying development assistance to the country to the bringing into being of the Commission and prior to the forthcoming opening of bids for the auction process for oil blocks.

While in Opposition, Jagdeo had also promised that the entire architecture for proper and transparent management of the oil resources would have been completed in 6 months, were the PPPC to have won the 202 General and Regional Elections. The PPPC did win those elections. Three years onwards this architecture is being constructed in a piecemeal fashion.

Jagdeo must be made to answer for these failures. He does hold responsibility for the natural resources sector.

One of the criticisms which he had leveled at the APNU+AFC concerned the signing bonus. He never came out definitely with guns blazing about the quantum of the signing bonus. But he castigated the Coalition government for the secrecy surrounding the signing bonus and the fact that it was kept hidden from the Guyanese people and even denied by some APNU+AFC government officials.

The APNU+AFC only secured a US$18M signing bonus. One economist, Dr. Tarron Khemraj, has estimated that Guyana should have received about US$238M. And this was based on estimated reserves of 3.5 B barrels. The proven reserves have now increased by almost four fold.

On Sunday last, in his column in the Stabroek News, Professor Clive Thomas noted that under the revamped fiscal terms for future Production Sharing Agreements (PSAs), the government will ask for a signing bonus of US$ 10M for shallow blocks and US$ 20M for deep water blocks. This is not much different from what the APNU+AFC signed.

And this is in a country in which it is established that there are some 11B barrels of reserves. Yet, very little opposition has emerged to these new draft terms developed by the PPPC.

Lionel Messi in 2017 had gotten a signing bonus from Barcelona of US$100M. Is the PPPC government saying that he is worth more than all the oil in Guyana?

This issue is important in the context of the application by REPSOL for a renewal of its exploration license. The government, interestingly, has said that if there is a renewal, REPSOL would have to pay a new signing bonus and the new terms relating to royalties and the 65% cap on expenditure.

If REPSOL is granted the renewal and finds oil, this means that the country would be entitled to repay them their US$500M exploration costs. Why should Guyana assume this risk? If Guyana however reclaims the Kanuku Block, it can put it up for auction, obtain better fiscal terms, inclusive of a signing bonus, and not have to be saddled with repaying REPSOL’s US$500M exploration costs should oil be discovered.

It therefore makes good sense to simply reclaim the block and put it up for auction. But with Jagdeo and the PPPC, you never know. They work in mysterious ways.

(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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• APNU+AFC, Both President Irfaan Ali and Vice President Bharrat Jagdeo, Neil Marks, Peeping Tom, Vice President

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