Latest update December 24th, 2024 4:10 AM
Latest News
- A race to the bottom: Some countries are prepared to give away value, rather than fight to retain it
- EPA waives environmental study for construction, installation of transmission lines and substations for gas plant
- Gaza toddlers got the polio vaccine, then an Israeli bomb took their legs
- $205M Mahaicony Magistrates’ Court commissioned
- Second powership switched on
A race to the bottom: Some countries are prepared to give away value, rather than fight to retain it
…Energy expert
Kaieteur News- Rather than fight to retain their wealth, some countries are prepared to give away value, a phenomenon economists refer to as the “race to the bottom” where countries compete for investors, without fully understanding the value of their resources.
This was recently explained by Energy Governance, Strategy and Policy Specialist, Anthony Paul in an interview with Kaieteur News. Paul was at the time responding to a question on how Guyana can claw back value, beyond inviting the oil companies to the renegotiation table.
Energy Specialist, Anthony Paul.
He spent the past 17 years supporting the work of the Natural Resources Governance Institute (NRGI), a highly respected international NGO, which was previously called Revenue Watch Institute. The Trinidadian is currently a member of its Governance Board and Chair of its Nominations and Governance Committee.
He explained that in that role and others, he engaged with both multinational companies and governments, including in Trinidad and Tobago, where he realised that there are many views of industry practice, which are often taken for granted. Paul said some may in fact be flawed and can be successfully challenged or rewired.
But more importantly, he stressed, “I have also learnt that no law or contract is 100% bullet proof. There are always loopholes to access opportunities for variation of interpretation, and additional value-capture, for both investors and governments, if they have the experience, skills, knowledge and desire to do so.”
The Energy expert noted that companies routinely exploit those that benefit them, to enhance the benefits to their shareholders. However, governments tend to be much more cautious in taking this approach, wary of pushing companies, often fearful of “affecting investor confidence”, “becoming less competitive”, “stability of business environment” and “sanctity of contract.”
Paul said, “This is often driven by a lack of experience- which can migrate towards to a lack of self-confidence- and the inability to engage and adequately utilize external supporting expertise, because of limited financial resources or experience/know-how/savvy”.
As such, he pointed out, “In the end, some countries are prepared to give away value, rather than fight to retain it, perpetuating the ‘race to the bottom,’ as economists call the phenomenon of countries competing for investors, without fully understanding the value of their resources to these investors.”
Paul explained that he has personally seen many occasions where some of the most successful companies and their leaders have made decisions that are counter to common-sense, technical or commercial evaluations, but which may fulfill what they perceive to be an over-arching “strategic objective.” In these cases, revenue or cost may play second fiddle to some other performance metric, designed to give confidence to stakeholders.
“That is why we have leaders. To weigh all the considerations, then make the decision that they feel is the best interest of their stakeholders. When governments act in this way, we tend to change the decision descriptor of their over-arching objectives from strategic to political. Over time, that has come to be seen in a negative context, the Energy Strategist noted.
He was keen to note that while he may give private, specific advice to clients, general information is also put into the public domain, which is meant to promote understanding and discussion among a broader cross-section of stakeholders.
To this end, he explained, “I know this question is meant to address decisions made by the Government of Guyana, which I am sure were made based on their understanding of the specific circumstances in Guyana. It’s not for me to agree or disagree with that.”
(A race to the bottom: Some countries are prepared to give away value, rather than fight to retain it)
Similar Articles
THE BLUNT OF THE DAY
Sports
Features/Columnists
This is our city
Peeping Tom… Kaieteur News- The City of Georgetown is stink, dirty and disordered. It is littered with garbage, overwhelmed... more
Breaking the Chains of Poverty: A need for political will
By Sir Ronald Sanders Kaieteur News- The year 2024 has underscored a grim reality: poverty continues to be an unyielding... more
Weekend Cartoon
