Dear Editor,
Dr Mangal is generally acknowledged in Guyana as a leading authority on oil and gas issues, specialising in off-shore geotechnical engineering, but also having experience in project management in the oil industry. He has worked around the world, and his academic qualification and background working elsewhere in the industry is commendable so his views on oil and gas are welcome. However, my letter to the Editor (SN: 16/01/2019) to which Dr Mangal responded (SN: 23/01/2019), was not about oil and gas. My letter focused on the need for foreign investment in the potentially labour intensive areas of mining, timber and agriculture to help reduce existing unemployment, and the need for investor confidence to encourage such investment.
I have lived and worked in Guyana and have observed firsthand, the stream of investors coming to Guyana, and leaving. I have been integrally involved in some of the transactions underpinning their investments, and have observed the ebbs and flows of investor confidence. I was here when Barama announced their investment in the 1990s. I was here when Omai invested. I spoke with the folk employed by those companies over the years. I saw the impact of their investments in mining and timber on the Guyana economy. I was here when they pulled out. I was here when GuySuCo closed estates. I saw the impact of that loss.
In my letter published in your column on 16th January, 2019, I
proffered that a large portion of Guyana’s unemployed represent a demographic which has traditionally been employed in the agriculture, timber and mining industries as labourers, weeders, cutters, tractor operators, machine operators, drivers, chainsaw operators, drudgers, etc, and are victims of the contraction in the mining, timber and agricultural industries in Guyana. I pointed out that, given our unreliable electrical and transportation infrastructure, the best hope for immediate re-employment of this demographic was to encourage new investors who can set up shop in the interior and extract resources in those industries without having to rely on our failing infrastructure, and I urged that ‘the single largest requirement to attract foreign investors engaged in those industries is investor confidence: our authorities need to demonstrate that investors can be confident that we will keep our promises to them.’
Dr Mangal objects. He states that ‘The linkage between unemployment and sanctity of contract is not evident in Guyana,’ and asks: ‘Where is the historical evidence in Guyana that overwhelmingly links Guyana’s unemployment problem with the breaking of contracts with foreign investors?’ Unamco provides such ‘historical evidence’. That company employed 1,200 people, set up a sawmill in Region 10, imported a plymill and built a 100 kilometre interior road for access – an investment of millions of United States dollars. The executive refused to renew its contract and instead political favourites were permitted to take over its concession.
Barama also provides such ‘historical evidence’. That company was persuaded to invest in Guyana by the grant of long-term leases of forest lands. In 2015, Barama was informed by the Government that the decision had been taken to convert its leases of forest concessions into a licence under terms which reduced its all-important security of tenure of those concessions. In response, Barama closed operations. Hundreds of jobs were lost. Equally significantly, the attempts by the Government to find new investors to take over those forest concessions have been met with investor scepticism, given our track record of keeping promises made to investors.
Then, Dr Mangal makes the bald (and un-researched) statement that ‘Guyana does not have a long history of breaking contracts with foreign investors.’ I disagree. We have been breaking contracts with investors since President Burnham nationalised Booker Tate’s investment in sugar in the 1970s. Dr Mangal cannot be serious.
Next, Dr Mangal denies that Guyana’s unemployment problem has anything to do with our habit of chasing away investors by pointing out that there is a myriad of other factors, such as an ‘inappropriate system of governance, flip-flopping racially based government, corruption, mismanagement, the brain-drain, an abandoned education system, etc.’ I agree that each of these factors also contributes to the problem of unemployment in varying degrees. But how does Dr Mangal rely on the existence of these other factors to support an argument that the loss of investors is therefore not also a cause of unemployment?
I have identified one cause of the unemployment problem, and suggested a solution to that cause. Dr Mangal has identified other causes, and I am certain that the whole country would benefit if he suggested solutions to those causes. But it defies logic to argue, as he has done, that because there are other causes of unemployment, loss of investors is not also a cause.
What is more startling is Dr Mangal’s unsupportable conclusion that my suggestion to encourage investor confidence in mining, agriculture and timber somehow ‘concerns oil’ and ‘contains a veiled attempt at supporting the unfair contract with Exxon.’ Dr Mangal states: ‘Mr Jonas claims that Guyana can only attract foreign investors if Guyana respects the sanctity of contracts, i.e. Guyana can only attract investors if Guyana does not re-negotiate the contract with Exxon.’ It is inexplicable how Dr Mangal equates my argument for the sanctity of contracts to a statement invented by him that Guyana cannot re-negotiate the contract with Exxon. Nothing in my letter can remotely be construed as advocating against renegotiation. In fact, like most Guyanese, I believe that our incompetent Governments bungled the whole affair.
But I do agree with Dr Mangal that the oil and gas industry should be front and centre in any discussion of economic policy by a political party, and I therefore propose to respond to his comments on oil and gas in a separate letter, with your permission.
Yours faithfully,
Timothy Jonas
