The Week-in-Review - November 6 to November 12, 2022

Oil & Gas

US firm picked for negotiations on gas to energy plant: Cabinet last Thursday issued a no-objection to a US firm being ranked number one to build a 300 MW power plant fuelled by offshore natural gas – drawing the country closer to a project that will spew climate warming residues and be the most expensive public sector undertaking in Guyana’s history, replete with safety and other risks. President Irfaan Ali made the announcement of the ranking via a video statement on the Office of the President Facebook page. He said that Cabinet had issued its no-objection to US-based CH4/Lindsayca being ranked number one to build the Combined Cycle Power Plant and Natural Gas Liquids (NGL) Plant at Wales, West Bank Demerara (WCD), under an Engineering Procurement Construction (EPC) Contract. In the statement, Ali said that Cabinet’s no-objection will now allow negotiations to proceed to conclude an EPC contract. Power China was ranked number two and may be engaged if negotiations fail to conclude a contract with Lindsayca by the end of November, he added. Importantly, the President said that Guyana will own both the power plant and the gas to liquids facility. This will raise concerns locally even though the President said that prior to the conclusion of the construction an international firm will be competitively selected to operate the project to international standards and best practices. PPP/C governments have presided over public sector failures the most prominent being the Skeldon Sugar Modernisation Project. While the President played up the estimated savings from this project he was completely silent on what it will cost the country and how it was going to be funded. He said that the Gas to Energy Project is expected to deliver power at less than half of the current costs. “Project generation costs, taking account of payment for the pipeline, operations and maintenance (O&M), and capital cost recovery, shall total less than five (5) US cents per kilowatt-hour”, he said. “Ladies and gentlemen, fellow Guyanese this is a significant movement forward in Guyana, not only achieving energy security, but us achieving an important benchmark that is a reduction in our energy costs so that our manufacturing and industrial development and expansion can take place and so that the ordinary families and the ordinary people can feel a substantial reduction in the cost of electricity in their pockets and in their household. Just for reference, a family at the end of this project that now pays GY$20,000 per month in light bill or electricity costs will see that costs coming down to GY$10,000”, the President declared.

Investment

Guyana signs up for trailblazing deal to produce drugs: Guyana has signed on to an agreement that would see pharmaceutical companies here eventually manufacturing drugs for distribution to Caribbean, Latin American and African countries. The South-South initiative was announced in Sharm El-Sheikh, Egypt, on the sidelines of the COP 27 summit and has the support of the European Union and the World Health Organization. “The Pharmaceutical Equity for Global Public Health Equity, which is being launched today, is a manifestation of actionable South-South cooperation. It is a model through which the countries of the South can assume greater responsibility for responding to health and other challenges. The Co-operative Republic of Guyana is pleased to be associated with the convening of this initiative. We pledge our support to this undertaking and to improving global public health equity,” President Irfaan Ali declared in a virtual presentation from Guyana, where he had joined Prime Minister of Barbados Mia Mottley and President of Rwanda Paul Kagame on the sidelines of the COP 27 Summit. They had discussed, according a release from Mottley’s office, the furthering of pharmaceutical equity for global public health. Stabroek News understands that Guyana’s involvement would entail the manufacturing of specific and listed generic pharmaceuticals for export, at a fraction of global costs, but it is unclear how funding will be sourced. It is also unclear if other drug manufacturing companies would be set up here, as currently only the New GPC has the capacity for large-scale drug manufacturing, followed by Twins Manufacturing Chemists. The countries’ leaders were joined by President of the European Commission, Ursula von der Leyen, and Director-General of the World Health Organization (WHO) Dr Tedros Adhanom Ghebreyesus. The ceremony was also witnessed by Acting Director, Dr Ahmed Ogwell Ouma of Africa CDC, President Dr Werner Hoyer of the European Investment Bank (EIB), and kENUP Foundation Chairman, Holm Keller.

Ali upbraids private sector for not capitalising on new opportunities, as GCCI calls for better business climate:

President Irfaan Ali on Friday chided the local private sector for not being in a state of readiness to take advantage of the opportunities presented to it. Ali, who was delivering the keynote address at the opening of the Georgetown Chamber of Commerce and Industry (GCCI) Business Development Forum, discarded his prepared speech and fashioned his address in response to calls made by GCCI’s President Timothy Tucker. Addressing the thematic areas of the Business Development Forum, Ali said that Guyana just wrapped up discussions with the United Kingdom Export Finance (UKEF) group that was in the country. He noted that the discussions involved the private sector and hundreds of millions of dollars in financing will be unlocked. “UKEF financing does not come with 100% UK input, it comes with 20% UK input and they met with the private sector. They met with you [Tucker and GCCI] and you’re talking about supplies and building a new supply chain of goods. How much of us will approach UKEF [for financing]? I can tell you, none. You see the government does have a responsibility of unlocking opportunity. The government has a responsibility of opening up opportunities, but you have a responsibility [as well],” the President said. “At pains, we brought the Saudi business investor group ready to form a partnership. We [the private sector] were not ready with one single feasibility study or business plan to present. The Korean group came, we were not ready with one business plan or feasibility to present,” Ali countered. Continuing on the offensive, Ali said that $100 billion was made available by Republic Bank for the development of agriculture but only five proposals were received. During his address, Tucker said that GCCI conducted a survey in which some 450 businesses indicated that they will need at least US$112 million in financing over the next year. “We have called on the hurdles for invoice factoring, for contract lending, for everything else [to be cleared]. Government has said they will clear all the hurdles once presented to them but yet we wait on the banks and it looks like we might die waiting on the banks. So I just want to say banks need to get up off of their ‘tush’ and get to work because we really need access to finance,” Tucker said to a roar of applause from his membership.

Governance

Minister Parag says blocked from visiting Belladrum Community Centre by APNU+AFC MP:

Minister of Public Service, Sonia Parag said that she was blocked last Tuesday from visiting the Belladrum Community Centre building by Opposition Member of Parliament Vinceroy Jordan and the Chair of the Community Development Council (CDC) Julian Davids. She said that the visit stemmed from an outreach by President Irfaan Ali held three weeks ago. During an interview with Stabroek News said that during the presidential outreach in the community, a resident requested that government look at the Community Centre to determine whether it is feasible to install a library, ICT hub or host training programmes for the youths there. She added that a promise was made to have the area checked out and to determine a way forward. The Minister said that she visited the community last Wednesday and that the gate to the Community Centre was locked. There were a number of residents there to meet with the Minister. “The NDC Chair [last week] said he was only aware [that I am coming] earlier in the day or something. I told him I’ll give him the benefit of the doubt that I’ll be back on Tuesday [November 8] to look at it and I’m hoping that it will be open at that point,” she related. Parag said that when she got there on Tuesday, she was greeted by Opposition MP Vinceroy Jordan and she explained the reason for her visit to the facility in the company of both youths and older residents of the community. She said that Jordan then told her that “we don’t want any development here” and at that point residents there started to object to his statement. The Minister said that Jordan then pivoted saying that development should be channelled through the correct authorities.

Constitution Reform Commission bill passed:

Efforts at reforming Guyana’s constitution can now be expected to get underway, following the passage of the Constitution Reform Commission bill in the National Assembly last Monday. Presented by Attorney General and Minister of Legal Affairs, Anil Nandlall SC, the bill seeks to pave the way for the establishment of a Commission to review Guyana’s constitution. The debate on the bill saw no contributions from the main opposition APNU+AFC coalition which had moments earlier walked out of the Assembly. Their exit was triggered by House Speaker Manzoor Nadir not entertaining a motion brought by Opposition Leader Aubrey Norton, for an urgent hearing surrounding what he contends is a bloated voters list for the upcoming Local Government Polls. The Speaker ruled that the matter did not qualify as being urgent and would therefore not be addressed at this time. Commending the bill to the House following its second reading, Nandlall said it was disappointing that after not making any contributions during the consultative stages of drafting, the opposition coalition absented itself from what could have otherwise been an opportunity to debate the bill in representing the thousands of Guyanese who would have supported them. His sentiments were echoed by Leader of the Liberty and Justice Party (LJP), Lenox Shuman, who in throwing his support behind the bill said that constitutional reform “is not and should not be a political football.” He said that all political parties campaigned on constitutional reform as a promise in their manifesto, and therefore the empty opposition benches was disappointing; opining that for “shallow political gains” they had not seen it fit to participate in the debate. Constitutional reform he sought to stress, is “for the people” and not political parties. While in full support of the bill, Shuman who is also Deputy Speaker of the National Assembly did point out what he said was the need for more indigenous inclusion, calling for the Indigenous Peoples Commission to be a sitting member on the Constitution Reform Commission. He also lobbied for one person from the Indigenous Peoples NGOs to be allowed to participate in the reform process.

$266.7B in tax exemptions granted for 2021 – Auditor General’s report:

While the Guyana Revenue Authority (GRA) collected $255 billion in taxes for the fiscal year ending December 2021, some $266.7 billion in tax exemptions were also granted with that amount slated to increase as the government further develops the oil and gas industry. The information was contained in the Auditor General’s report examining the public accounts of Guyana for the year 2021. The report was laid in the National Assembly last Monday. Auditor General Deodat Sharma said that the government estimated 2021’s revenue collection to be $242 billion but that number was surpassed with $255.086 billion collected and paid over to the Consolidated Fund. This represents a positive variance of 5%, equivalent to $12.995 billion. However, the report highlighted that despite the positive performance, there were substantial shortfalls for the revenue categories of Income Tax on Self-employed, Other Personal Tax, Corporation Tax on Public Sector Companies, Environmental Levy, Liquor Licence, Miscellaneous Penalties, Travel Voucher & Travel Tax, VAT on Import Goods and Domestic Supply and Excise Tax on Petroleum Products and Tobacco totalling $10.349 billion. According to the GRA, for the period August to December 2021, a revised revenue target was used. This revision was done subsequent to the mid-year reporting having considered the performances of each tax type during the first half of 2021. The approved target was set at $242.09 billion, this was revised upwards to $254.96 billion, an increase of $12.87 billion or 5.3% (VAT and Excise Tax was increased by $9.43 billion or 10.1% to $103.13 billion). For 2021, the Auditor General reported that tax exemptions amounted to $266.774 billion when compared to $134 billion in 2020 representing an increase of 94.7%. The report pointed out that revenue “forgone” for the year 2021 represented 97.09% of the