THE $20 BILLION QUESTION FOR GUYANA

On Friday last, the New York Times (NYT) published a report, headlined ‘The $20 Billion Question for Guyana.’ It was a lengthy review of Guyana and the impact that the oil discovery by Exxon and its partners in its offshore Guyana venture is likely to have. Two recent articles by the Wall Street Journal and Foreign Affairs, of world-wide reputation, like the NYT, were published and reprinted in Guyana. Few Guyanese would recognize the description of Georgetown by one of them as “sleepy” or by the as a “musty clapboard town… which seems forgotten by time.” Notwithstanding these unflattering first impressions of Georgetown by foreign journalists, the articles helped to highlight not only the amount of financial resources that will become available to Guyana, but how those resources can be used or misused.

Guyana is described as an unlikely setting for the next oil boom. It is “one of the poorest countries in South America can become one of the wealthiest.” The article said that all the talk in Georgetown is about a sovereign wealth fund to manage the money. It underlined Minister Raphael Trotman’s comment, perhaps speaking hyperbolically, if he indeed said so, that we have been given a chance to get things right because “the Chinese cut down our forests and dug out our gold and we never got a cent…we could end up with the same experience with ExxonMobil.” Whatever the dangers, Rystad Energy is quoted as predicting that Guyana will get $6 Billion by the end of the 2020s. But this is a modest estimate with a production of eventually 500,000 barrels a day. Doug McGehee, Exxon Operations Manager, predicted better social services and infrastructure, “if the government manages the resources right.”

Mr. McGehee has worked in Angola, Kazakhstan and Equatorial Guinea, in all of which countries the oil wealth floated to the top, leaving the poor behind. Mention was made of Venezuela and Trinidad, which so relied on oil and gas, neglecting traditional industries, that as soon as the prices fell, the economies tumbled in sympathy. The apt question is asked at the beginning of the article: “This largely underdeveloped country on South America’s Atlantic coast is the unlikely setting for the world’s next oil boom. But is it ready to handle the riches?” The writer is not too sure. He points out that Guyana has only nine technically trained people responsible for regulating oil production, engineering and geological research. The legislation for the sovereign wealth fund is now in limbo. The energy department has not got off the ground. A bill to set up the petroleum commission is stuck in the National Assembly.

Government remains lethargic about preparations for the oil industry that investors are excited about and local commentators are wary of. Little public education has been undertaken to prepare Guyanese for the time when the inflow of income will become so great as to be now inconceivable to the average Guyanese. Yet this overlooked aspect is perhaps the most vital preparatory step in building public opinion to protect our oil wealth from theft and depredation.

As commentators concentrate on the alleged flaws in the Government’s contract with Exxon and local business organisations complain about the local content law, the Guyanese people remain largely disinterested, adamantly resisting the pressure to become engaged despite the publicity, greeting every new discovery with a shrug. By now they have certainly noted the discoveries, but it appears that the pervasive view is that there is nothing in it for them. This is not surprising. Guyanese have been fed a diet of false promises for decades, based on the fiction that somehow an economy based on commodity production, largely un-restructured since colonial times, will deliver a “good life.” Unsurprisingly, the exploitation of our alleged resources has benefited only a few at the top and foreign investors. Too many Guyanese are poor and remain unimpressed and jaded, with little confidence that oil riches will trickle down to them.

Yet it is of vital importance that the Guyanese people be equipped with knowledge from both the government and opposition of what the oil wealth will mean for Guyana. In the absence of efforts to educate the Guyanese people about what oil will mean for Guyana, the less interested or equipped Guyanese will be to defend and protect the resources and the greater will be the theft. The common thread of the Wall Street Journal, Foreign Affairs and now the New York Times is the vast resources that will become available to Guyanese and the great benefits that will flow if it is creatively invested and not stolen.

Malaysia is an oil producing country, of about 700,000 barrels a day, with a population of 31 million. In May, the governing party for decades, UNMO, was voted out of office because its prime minister is alleged to have stolen billions. Guyana needs a population, educated enough and militant enough, that will not wait until billions are stolen but will act promptly against any government that betrays the interests of the people. But alas, unless the currently entrenched system of ethno-politics is brought to an end by constitutional reform, corruption and nepotism will rule the day.