Today marks the third anniversary of the PPP/C government in office and this period could well be evaluated through the prism of the words oil and gas and what they have come to mean for the country and its people. President Ali and his government will undoubtedly trumpet this triennium as transformational and reflective of prudent management and a judicious sharing of the bounty. The reality is quite different.
Anecdotally and reflected in nine months of weekly interviews by this newspaper with people from all around the country, the cost of living continues to buffet and immiserise. Without the oil economy it may well have been that these people would have been even worse off but taking account of the petroleum revenues that have been flowing into the country since December 2019, the salt of the earth quite naturally expect the calculus to be different and positive. For example, budget 2023 will absorb US$1b (208b) in oil revenues. What portion of that amount has been allotted in a structured manner to ease the plight of the working poor? No one could seriously contemplate price controls or subsidies but aside from sporadic handouts which are given as if they are the property of those in power, little else has been done to interrogate how the resource curse might well be impacting on the poor and what measures might be put in place.
One evident problem of the oil economy has been that consumption by the classes that have prospered has resulted in expanded demand for basic food and other items and this has had an inflationary impact on the people who have not seen a growth in income or a significant reduction in their tax burden. President Ali and his Finance Minister may wish to address the communities spoken to by this newspaper on the cost of living.
Approaching the fourth anniversary of the start of oil production and straddling two administrations, the people of this country are yet to see regulatory rigour over the petroleum industry. Des-pite a firm commitment three years ago, the government is yet to present legislation for a Petroleum Commission to regulate and oversee all aspects of the industry. Instead, regulation has been largely entrusted to the Ministry of Natural Resources and the Environmental Protection Agency (EPA) which have operated like partners of the main oil operator here, ExxonMobil, rather than holding them accountable. The EPA, in particular, and its appeals body the Environmental Assessment Board have come under close and justified scrutiny for taking unfathomable decisions in favour of ExxonMobil and its subsidiary, Esso Exploration and Production Guyana Limited. The dangerous signal being sent here is that Exxon-Mobil, its partners and its prime contractors have a friend in the government rather than a policy setter with a potent regulatory and enforcement arm.
If there is any hope of redressing the imbalance it may lie in a series of court actions brought by civic-minded citizens. One case in particular brought by Frederick Collins and Godfrey Whyte via attorneys Melinda Janki, Seenath Jairam and Abiola Wong-Innis seeks to hold ExxonMobil accountable for the indemnification of Guyana from any liability for a spill from its operations. The case resulted in a ground-breaking decision by Justice Sandil Kissoon in favour of the applicants and the people of this country and has been inexplicably appealed by the EPA no doubt on the instructions of the government. Now before the Court of Appeal the matter could well end up before Guyana’s apex court, the CCJ and establish clarity in relation to the 2016 Production Sharing Agreement (PSA) and its attendant environmental and production permits and licences.
Still on oil, the clear intent by the government to approve up to 10 producing platforms in the Atlantic under the present PSA is reckless. First, it had been widely accepted that the PPP/C government would have insisted on a renegotiation of the 2016 PSA prior to any further approval of oil platforms. The government had everything going in its favour: a wholly vulgar monstrosity imposed on its predecessor which was bereft of any negotiating input from Guyana and the reality that ExxonMobil would not walk away from the lucrative Stabroek Block under any circumstance. Why President Ali has not recognised this and demanded that ExxonMobil return to the negotiating table is unclear and very troubling. A higher take from platforms three, four and five would have given Guyana far more than it will garner under the current terms and it would have reduced the need for the approval of more platforms. Approval of more platforms increasingly operates in the favour of ExxonMobil, as it creams off stratospheric profits, all the while expanding the range of risks to Guyana from spills and damage to the ecosystem.
By all means Guyana must be able to extract oil to fuel its development but it also has climate obligations to consider. The evidence of climate change is all around it and Guyana will be particularly vulnerable to sea level rises which can overwhelm its defences. It must act with restraint considering that it will be contributing to Scope 1, 2 and 3 emissions. Why can’t President Ali understand that a depletion policy is needed to balance our needs with commitments to green energy and a lowering of emissions?
Guyana is also deepening risks to its economy and the environment by the foolhardy plunge into a massive gas to energy project, the final cost of which is unknown. Aside from being locked into burning a dirty fuel even if less so than heavy fuel oil, Guyana will also be multiplying the risk to communities near to pipelines and the gas to liquids to energy plants and to their employees. The promise of a halving of electricity production costs remains just that. A promise that has not been underpinned by comprehensive studies, including feasibility, modelling of what average oil prices might be over the period and the benefits of switching to renewables even if costs may be initially higher. The current travails of the gas to liquids plant, NiQuan Energy in Trinidad should be a cautionary tale for this government. It was recently linked to an accident where an employee died and currently has a debt of US$250m. Worse yet, four plants at Trinidad’s Point Lisas Industrial Estate had to be shut as their gas supplier experienced a safety incident. It would be advisable for those pioneering Guyana’s gas to energy project to pay careful attention to what is happening in Port of Spain with gas.
All over the country there are signs of renewal and massive new infrastructure being erected. Having found the beginnings of an oil bonanza the government has naturally put this to work in all regions of the country. It will draw high commendations for governance were it to successfully supervise these projects but there are many danger signs. Contracts are being given out to those who are not established contractors, those who are unable to adequately mobilise and those who are burdened with other projects. There have been a number of misfires and deadlines have passed without results. In recent days a Trinidadian contractor has been told in no uncertain terms that they risk being dismissed from the Conversation Tree project.
Another year or so will yield a better picture of how these projects are faring. A key one is the East Bank to East Coast connector. It has already had to hire 60 foreign truck drivers, a sign that the local content facilitators were unable to gauge needs in this sector and inspire the necessary training so that locals much in need of jobs could benefit. Another major project is the new bridge over the Demerara River being undertaken without an Environmental Impact Assessment study. This project will be held up to the electorate in 2025 as the basis for making decisions. A lot is riding on whether it will be finished within time and budget.
Never before has there been such need for a robust and disciplined opposition. Never before has there been such a great need for vibrant watchdog institutions such as the Public Accounts Committee of Parliament, the Auditor General’s Department, the Integrity Commission and the Public Procurement Commission. In the meanwhile President Ali continues to chart a course for a `One Guyana’ that does not seem to encompass the formal opposition – the representatives of nearly half of those who voted at the 2020 general elections. This was starkly demonstrated in Parliament recently when the government voted in for a second time a Deputy Speaker from the list joinder which holds only one seat. The opposition has legitimately raised the question of whether there is equitableness in the manner in which resources are being distributed across the country and this must be answered comprehensively by the government.
Flush with oil money, democratic credentials and the well-established instinct to want complete control, the next two years will test definitively whether the PPP/C government is prepared to be accountable or to simply steamroll its way ahead. The May fire at the Mahdia dorm that claimed 20 lives and the handling of the rape allegation against former Minister Dharamlall suggest that the government has not yet matured to the understanding that its senior officials must be held accountable for their actions.
Now more than ever, civil society has an ever growing role to hold the government accountable akin to the campaign being waged by progressive democrats in Israel to prevent the Netanyahu government from undermining the judiciary. Vigilance must be the watchword.
