Gov’t saddled with preparing Guyana for oil and gas – Natural Resources Minister
– consequence of former Govt’s mismanagement
Minister of Natural Resources, Hon. Vickram Bharrat says the failure of the Coalition Government to manage the oil and gas sector has left the PPP/C Administration saddled with the task of preparing the country for the industry.
The Minister made this statement during his presentation to the Twelfth Parliament on Thursday.
“We have seen many countries around the world – Libya is a very good example – to show where countries prepared administratively for production, although they were still in the exploration stage.
Guyana was quite the opposite. We had a Government that was celebrating first oil, but was not preparing us administratively to deal with first oil,” he said.
Minister Bharrat referred to the 2016 Production Sharing Agreement (PSA) signed between ExxonMobil, its partners and the former Government, which he said was “lopsided.” The Minister said it is perhaps one of the “worst agreements in the history of the world.”
In that agreement the APNU+AFC Government agrees to pay ExxonMobil’s share of taxes through Guyana’s revenue share; ExxonMobil was also given permission to recover uncapped interest rates on loans used to fund developments; and a Stability Clause that sees Guyana compensating ExxonMobil and its partners if any changes are made to the fiscal regime of the contract that would result in losses. These are just three examples of hundreds of provisions that leave Guyana open to significant value leakage.
The Natural Resources Minister spoke in depth about the Government correcting the defects in the APNU+AFC’s local content policy. The policy was released in January 2020. The Minister explained that the implementation of the Coalition’s local content policy depended on the willingness of partners.
“It is just a policy on paper. The policy does not give quantitative ration or percentage or required employment of persons, and/or the use of Guyanese suppliers; no measures, no timeframe.”
The Government is in the process of finalising its own local content policy.
“Our Local Content Policy will benefit Guyanese and Guyanese businesses. That is what we want; to ensure that the oil and gas sector benefits every single Guyanese,” the Minister said.
Going hand-in-hand with an effective local content policy is a workforce capable of offsetting the demands of the oil and gas industry.
The Natural Resources Minister noted that over the past five years, little was done to train Guyanese for the budding sector. He said the Government would be establishing a local Oil and Gas Institute to train Guyanese and other citizens in the Caribbean for the petroleum sector.
Minister Bharrat also said Government is committed to improving the Natural Resources Act. The Act governs the management of Guyana’s oil fund and how the money is spent.
The commitment is in keeping with the PPP/C Government’s pledge to implement several measures to ensure accountable and transparent management of the country’s natural resources. This includes the establishment of an arm’s length Sovereign Wealth Fund (SWF), void and insulated from political interference.
Minister Bharrat assured the National Assembly that Government will work assiduously to ensure that Guyana reaps the maximum benefits from its petroleum sector in a prudent, transparent and accountable manner.