Sadly, the more the truth is revealed about oil contracts, the angrier we get. Has anyone noticed how quiet APNU/AFC has gotten about the $US5000 per person annual cash transfer Clive Thomas and the WPA were proposing? The PNC, AFC and WPA have gone stark silent. They too have realised it would be some time before Guyanese meaningfully benefit from Guyana’s oil resources. But it is becoming crystal clear that oil companies, among the world’s richest corporations, with some of the world’s and history’s highest-paid executives, are about to get vulgarly richer, while poor Guyanese must wait for some time before even little bits of benefits reach them.
Make no mistake, oil is good for Guyana. On paper, we are destined to become one of the richest Caricom countries and one of the wealthiest developing countries in the world. Global economic bodies, including the World Bank and Bloomberg, agree Guyana’s GDP will increase in 2020 to almost US$10,000 per capita from about US$4500 presently, overall GDP increasing from around US$5B to about US$10B, an almost 100% increase. While oil companies will become filthy richer from day 1, no matter which Guyanese government is in place, the truth is that as long as present dispensation is allowed to continue, the riches oil companies will benefit from immediately will not be shared by Guyanese in their daily lives any time soon. On paper, we will become a rich country, but in reality, poor Guyanese will take crumbs.
That is why everyone has gone quiet, realising we have been shafted, that APNU/AFC gave away our national patrimony, our oil for little or nothing. Ordinary Guyanese are crying out that we put APNU/AFC to protect our interest, instead, they allowed “cat to eat we dinner”.
Take the announcement that oil companies want to build their own offices in Guyana. With the vast oil resources they control in Guyana, this makes sense. These Headquarters will become landmarks, a must-visit for Guyanese and tourists. I can see teachers planning visits to these buildings for children. It will positively add to Guyana’s landscape. For certain, these office buildings for oil companies are expected to be far more expensive than the Marriott Hotel, the most expensive privately-owned building in Guyana, reflecting how much richness will be generated from Guyana’s oil and gas. But guess who will pay for these luxurious office buildings? It will be paid for by Guyana’s oil. Oil companies will deduct this cost from oil revenues before Guyana can get a share of profit. In other words, these spanking new first-world headquarters will eat into the profits and Guyana is the big loser. Why should oil companies not use their share of profits to pay for their own headquarters? And our Energy Department says these companies can inflate the costs without being penalised. Do you see why lots of Guyanese think “cat eat we dinner”?
Already, our measly royalty, in the form of barrels of oil, is not really 2% or 1%. We have to pay oil companies for extracting and transporting our oil to our storage sites. We then have to pay someone to sell it for us. Presently, the Government has embarked on a process that removes all transparency and every norm of accountability and international bidding standard for finding that someone. There is no way of knowing whether we will have a good deal. There is no way to know someone else is not getting rich from our resources while we are left with crumbs. What we do know, after deducting all these costs, our royalties becomes cut in half. And Granger cannot be bothered, even after his own energy boss tells the nation the Department of Energy does not really know what they are doing but nobody should worry because they will learn as they go.
We know that after using our profits to pay off corporate and income taxes and giving oil companies enormous duty-free concessions, our share of the profits will take a sledge-hammering. So even though on paper we are entitled to a 50% profit, it is really more like a 66 to 34% share. Even with all these constraints, even with a bad deal, oil and gas are big enough to ensure Guyana’s share is still meaningful, that Guyana’s benefits can genuinely change people’s lives for the better. But it means we must ensure total transparency and accountability, competence and efficiency and a Sovereign Wealth Fund (SWF) managed in the interest of our people, and not a group of politicians and their friends and families.
But APNU/AFC designed a politically-controlled SWF intended for oil companies to get filthy richer, some politicians, their friends and families to get rich, but for the majority of Guyanese to live just as they did before oil. This tragedy has already played out in Angola, Equatorial Guinea, Nigeria and far too many other places on earth. It is not too late for Guyana to change this ugly storyline. To begin with, as Bharrat Jagdeo and the PPP promised, we must repeal and re-enact an entirely new SWF.