From land to sea, Guyana’s wealth is being given away for free

Jul 29, 2024 Features / Columnists, Peeping Tom

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Kaieteur News – Guyana is a nation rich in natural resources, from its bountiful land and mineral resources to its vast offshore oil reserves. Which other country in the Caribbean has so much agricultural land along with gold, bauxite, timber, diamonds, oil and natural gas?

However, the stark reality is that while the country is blessed with these resources, the benefits are disproportionately skewed in favour of foreign investors. This exploitation leaves Guyanese citizens with a mere fraction of the wealth generated from their own land and waters.

The most glaring example of this exploitation lies offshore, where Guyana’s oil reserves have been effectively pawned off to multinational oil companies. Under the current Production Sharing Agreement (PSA), the country receives a meagre 2% in royalties and a 50% profit share, which is calculated after the deduction of expenses. These expenses are capped at 75% of the revenue, meaning that in reality, Guyana only receives about 14.5 cents out of every dollar of oil produced. This arrangement is highly favourable to the oil companies, leaving the nation with minimal returns from its own resources.

Moreover, the PSA grants oil companies excessive control over the utilization of natural gas. The previous opposition, now the government, has criticized this agreement, highlighting how it effectively places the control of a valuable national asset into the hands of foreign corporations. This imbalance of power and profit is unacceptable for a nation striving for economic independence and growth.

The fisheries sector in Guyana also faces significant threats from potential foreign exploitation. A few years ago, there was a proposal for Chinese involvement in offshore fishing. Had this materialized, it would have devastated the local fisheries sector. The type of vessels proposed would have harvested and processed fish directly on board, bypassing any value-added processes onshore. This would have stripped local fishermen of their livelihoods and prevented the domestic economy from benefiting from the processing and sale of fish products.

This proposal epitomizes the extreme of the resource extraction model, where foreign entities extract raw materials with little to no benefit to the local economy. It is a clear indication of how Guyana’s resources are at risk of being exploited for the benefit of others, rather than being utilized to foster domestic growth and prosperity.

On land, the situation is similarly dire. Australian, Canadian, and Chinese companies are actively involved in the extraction of Guyana’s mineral wealth. These companies are allowed to freely repatriate their earnings, taking substantial profits out of the country. The case of OMAI, where gold was exported without significant local benefit, highlights the systemic issues in how Guyana’s natural resources are managed.

The government’s policies have allowed these foreign entities to cream off the country’s mineral wealth while the local economy sees minimal returns. This not only depletes the nation’s resources but also hinders its potential for sustainable economic development.

While these exploitative practices continue, local political parties are embroiled in disputes over who benefits from the limited proceeds of oil revenues. Instead of uniting to demand better terms and greater benefits for the country, they are squabbling over crumbs. This internal division is a greater tragedy than the exploitation itself. It distracts from the urgent need to renegotiate agreements and ensure that Guyana secures a larger share of the wealth generated from its resources.

The consent to exploitation, coupled with infighting, means that Guyana is not only being exploited but is also complicit in its own exploitation. The focus should shift from internal disputes to a united front demanding fairer deals that prioritize the nation’s interests.

It’s time to address this imbalance and ensure that Guyana’s resources benefit its people first and foremost To address these issues, Guyana must adopt a more assertive stance in managing its natural resources. This involves, at the minimum, renegotiating existing agreements to secure better terms, such as higher royalties and a more equitable profit-sharing arrangement in the oil sector.

The government must implement policies that ensure local value addition and limit the repatriation of profits by foreign companies. For too long successive governments have preached about local value-added and its benefits but have done previous little to add value to our natural resources. A prime example is in the bauxite sector with the more than 50-year promise of a smelter which has never materialized.

Investing in domestic industries, such as fisheries and mineral processing, can create jobs and stimulate economic growth. By retaining more of the value generated from its resources, Guyana can build a more sustainable and prosperous economy.

Political parties must set aside their differences and work together for the common good. Instead of fencing with each other over crumbs, the parties should be singing in tandem for better terms from the multinationals. A united front can more effectively advocate for the interests of the nation and its people, ensuring that the wealth generated from natural resources is used to benefit all Guyanese.

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

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• Guyana’s wealth, offshore oil reserves, Peeping Tom, PSA

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