The huge oil and gas find has the potential to leapfrog the country from low income to high income status if properly managed. Already concerns have been raised by the International Monetary Fund and several local analysts regarding the terms and conditions of the contract entered into between the government and the oil giant ExxonMobil which could see the country losing billions of dollars by way of revenue.
The government has already started on a bad note by initially attempting to hide a signing bonus of US$18M, and while there is nothing to suggest any sinister motive, it does raise concerns regarding transparency and accountability in the context of the Fiscal Management and Accountability Framework.
Unfortunately, the full benefits of oil will be lost to us due to two main reasons: firstly that the drilling operations are offshore which severely limits local employment opportunities; and secondly, because the processing of the crude into refined products will be done overseas. This means that there is very little, if any, scope for value added operations.
The challenge for Guyana is to find ways to mobilize the requisite capital to finance the construction of an oil refinery.
A similar fate was experienced in the case of bauxite when we were unable to mobilize capital to set up a bauxite refinery plant in Linden thereby losing millions by way of value added products, export earnings and job opportunities.
We seem doomed to be a producer of primary products in which we sell cheap and buy dear thereby worsening already unfavourable terms of trade and balance of payments. We are condemned economically to getting, as it were, the raw end of the stick. We remained a primary producer of raw sugar for decades and all hopes of constructing a sugar refinery have now dissipated in thin air with the downsizing of sugar operations.
We are poor because we are poor. However, this need not be the case especially in this age of venture capital and transnational hegemony. What is required is new and innovative thinking and a strategic repositioning of the economy to take advantage of emerging technologies and markets.
I believe the time is ripe for the setting up of a bi-partisan, multi-stakeholder and highly technical Economic Commission, especially in the context of our emerging oil and gas economy. Guyana’s fortunes and developmental prospects cannot be placed in the hands of a select few, many of whom lack the technical expertise to effectively and competently manage the economic destiny of this resource-rich country.