Trinidad and Tobago’s Opposition Leader Kamla Persad-Bissessar on Thursday said that while Guyana should work towards ensuring its “energy security and energy independence,” its citizens should not abandon the country’s agricultural and other industrial prospects as the emerging oil and gas sector here is developed.
“Do all of this legislatively. You need to have robust legislation to protect your country’s patrimony. At the same time it must not be so filled up with endless bureaucracy and red tape that it will drive away potential investors. You need the investors. They are coming with equity. They have the money to monetise the resources,” Persad-Bissessar, the feature speaker, told invitees at the Guyana Manufacturing and Services Association’s Annual Awards at the Pegasus Hotel on Thursday evening.
Speaking on the topic “Managing Oil and Gas Revenues – experiences and lessons learned from Trinidad and Tobago,” Persad-Bissessar said there are important lessons that Guyana can learn from the twin island republic’s experiences, but she was sad and embarrassed to speak about managing oil and gas revenues to a Guyanese audience “given what is happening in my own country with our oil and gas sector.”
The T&T government’s decision to close the Petroleum Company of Trinidad and Tobago (Petrotrin) and other decisions regarding the energy sector, she said, have generated many questions regarding the supply of imported fuels and exported crude. These remain unanswered and they continue to be of concern not only to the opposition, she added, but to citizens, multinationals and foreign investors.
As Leader of the Opposition, she said, she remained firm in her position that the decision to close the Petrotrin refinery is not in the best interest of T&T. “This is apparent in the position in which we now find ourselves—a high energy consumer, made even more vulnerable in a volatile sector, tied to the vagaries of international superpowers that will now control our energy requirements and outputs.”
Noting the fact that Guyana’s high energy prices have stymied growth of the manufacturing and other sectors, she said, T&T will become dependent on importing energy from outside because of the closure of the refinery.
“While you will be shooting rockets up in the sky, we will be shooting down into the grave in terms of our economy. That is what I see that latest decision is about,” she said. “I am hopeful and fairly certain that this is one path that Guyana should never find itself on. Guyana should, above all other things, especially having been an importer of energy for so long, work towards ensuring its energy security and energy independence. We have just surrendered our energy security by decisions taken with respect to Petrotrin. I urge you never to do that. These are critical to a country’s success and indeed future,” she added.
Highlighting that T&T’s involvement in the petroleum sector dates back more than 100 years and it was now in the doldrums due to mismanagement, she said, “That is why I am saddened and deeply embarrassed in trying to tell you what to do with your oil and gas sector when in my own country we have not been able to sustain it.”
Noting T&T’s focus on the energy sector and failure to diversify its economy, she said, the paradigm shift from an agriculture economy to an oil-based economy and now into a gas-based economy has had important learning curves.
Guyana, rated among some of the poorest countries in the world, she said, “is a great place to be because there is nowhere else for you to go but up.”
Guyana is a global exploration hotspot, she noted, with ExxonMobil’s first discovery classified as a giant oil field and the other huge discoveries made since then.
With oil production starting in 2020 and with a small population of less than one million people, she said, “You are living in a place that has tremendous potential.” She quipped that she was telling her friends at the head table, “If I had money, I would buy land in Guyana.”
But she urged the private sector not to leave everything to government. “The day you leave everything up to government, is the day nothing gets done,” she said.
On the spending of the expected massive windfall from production, she said she would recommend that government’s national vision should be the improvement of the lives of all citizens.
She recommended a national policy for development of Guyana, involving all stakeholders.
“You should be sitting in a think tank now and develop a national policy. What do you see seven generations down?”
If there is none in place, she said, “Don’t wait till 2020. Now is the time to have this national policy for development.”
The sale and production of resources must be able to not just move the country’s GDP rankings but should have a tangible effect on the daily life of every citizen.
Leaders will need to make bold decisions to move industries forward while ensuring at all times a social safety net to cover the most vulnerable. “Guyana should not become a country of the haves and have-nots,” she warned.
Moving industries forward, she said, will require vision and agility in navigating the perils of very volatile pricing and resource availability.
“Where you want to be seven generations down,” she said, “is not to be cursed by the black gold from your soil. You want to be where your economy is fully diversified and not dependent on just the oil and gas sector.”
She continued, “That is one mistake we made in Trinidad and Tobago. Today I am sure we regret; I certainly do regret that.”
When the oil and gas sector becomes lucrative and wages and salaries are much higher than other sectors, Persad-Bissessar said, everyone gravitates towards it, including supporting services.
“Therefore, your entire population is totally focused and locked on to this lucrative business of selling black gold and finding black gold. Then what happens? Your agricultural sector is gone. Every other sector is gone and you become an exporter of the black gold, but then you become an importer of everything else when all the other sectors go.”
T&T has been talking about diversification for years, she said, “but people never bothered because we were making so much money from the hydrocarbon. Now it will be perhaps too late. ‘Too late’ some will sing and some will cry.”
In a brief background, she said, the first successful oil well was drilled in 1865 after failed attempts. As a result, she noted that the objective was to never stop exploring, researching and incentivising for further exploration.
“You think seven generations ahead. Even as these wells are coming in successfully and you will start monetising by 2020, do not stop the exploration. Take back some of the money you make and reinvest into exploration and production.”
“As a young developing nation,” Persad-Bissessar added, T&T had its challenges in understanding and managing the oil resources, harnessing and regulating it and in maximising opportunities from the revenues garnered from the sale and processing of crude oil.
A year after T&T gained independence in 1962, she said, the government set up a commission of inquiry to “take a new look” specifically into the oil industry.
The commission’s terms of reference were to examine the situation in 1963 and future prospects in the context of the economics of the world oil industry, to recommend a legal framework for the oil industry in T&T which would stimulate the operations of foreign investors while safeguarding the interests of the nation, and to make recommendations designed to ensure the greatest possible stability compatible with growth in the industry, including the level of employment. “Guyana would do well in my … view to consider these very said terms of reference for Guyana’s own homegrown recommendations and remedies,” she said.