… says many issues still need to be addressed
First oil is here, but what’s next? According to the Head of Transparency Institute of Guyana Incorporated (TIGI), Dr Troy Thomas, the country, in many ways, was unable to prepare well for this critical sector.
In an interview with Inews, Dr Thomas noted the importance of Guyana putting in place important checks and balances to ensure the country benefits as much as it should from the sector.
But he is of the view that with the rush to production, a lot of important systems were not put in place to protect Guyana’s interests. One of the most important, Dr Thomas noted, was a robust local content policy.
“The move from finding oil to production, the timeframe is short. And I think it did not allow us to prepare very well for many things. By and large, our feeling is that things feel rushed and that’s something we have to be careful of, because of the importance of the sector going forward.
“I want to be optimistic, because of its importance to Guyana, but there are many things that need to be addressed. So, while I want things to work out well for all of us, I feel sometimes like we are rushing into things and not making sure all systems are in place,” he said.
Dr Thomas also recalled that there were many unanswered questions regarding Guyana’s oil deals with some companies. He noted that some of the deals Guyana signed had clauses that were not in the country’s favour.
“There are many questions, unanswered questions. So that’s the thing that worries me. In general, I know we want to get oil and start benefiting from the revenue, but at the same time there are all those checks and balances we cannot lose sight of.
“The issue is, there is still a lot could have been sorted out or don’t seem to be in Guyana’s favour. And because they signed these things without people knowing, there wasn’t an opportunity to scrutinise it in general.”
The oil sectors
Earlier this year, the Inter-American Development Bank (IDB), having concluded its Article IV consultations in Guyana, had forecast that come 2024 oil would dominate Guyana’s Gross Domestic Product (GDP) by as much as 40 per cent.
Underscoring the importance of this sector is the fact that no single sector had more than a 15 per cent share of the GDP as of the middle of this year. According to the Finance Ministry’s 2019 mid-year report, the highest individual segment of the GDP was the wholesale and retail trade, which had a 13.4 per cent share.
Combined, agriculture, fishing, and forestry had just a 15.6 per cent share of the GDP, with major sectors like sugar, rice and forestry having just 0.9 per cent, 3.5 per cent and 1.7 per cent respectively.
First oil was announced on Friday, yet there is no local content policy or Petroleum Commission. In the case of the former, the Department of Energy, which has been entrusted with such, had previously announced the policy would be ready for first oil.
In the case of the latter, a Petroleum Commission Bill was previously on the parliamentary order paper, but did not get very far. It was subjected to several revisions, with reports emerging last year that the World Bank would redraft the bill.
In the absence of a Petroleum Commission, the Department of Energy has been carrying out much of the functions that would be expected of such a commission. The difference, however, is that the Department reports directly to the President.
There is also no national oil company, no depletion policy and no oil spill contingency plan. While Government has been almost mum on the first two, it is understood that the contingency plan is a work in progress that is long overdue.
There has also been no completed audit of the billions of US dollars that has been claimed by oil operators in cost oil, although one has recently started. And by Department of Energy Director, Dr Mark Bynoe’s own admission, there is no penalty for companies who mislead authorities about cost oil claims.
There is also no ring-fencing provision to protect Guyana from costs being transferred from one well to another. There is, in fact, not a single oil-related bill that has been tabled by the Government and made into law, with the exception of the National Resource Fund Act.
