– wastage of the nation’s financial resources to pay high-level consultants
In the latter part of last month, the Natural Resources Ministry, and by extension the Government of Guyana (GoG), organised a high-level meeting with a team of international consultants with the view to advance deeper engagements with respect to the preparatory works for petroleum production in 2020. This columnist is, however, taken aback by this – premised on the fact that the GoG seems to be in a momentum of unnecessarily wasting huge amounts of the nation’s financial resources on these sort of national, public engagements – because obviously, upon reviewing the profile of these consultants, they are going to be extremely costly to the nation – and more so – to regurgitate fundamentally the same level and quality of advice to the Government that this columnist had written about long before they arrived in Guyana – some of which this author had written about since last year August 2017.
It is against this background that (1) there is absolutely no need to waste the nation’s financial resources on consultants to come here and provide guidance to the Government on how to spend the oil revenues let alone the fiscal management framework of the petroleum sector, because Guyana has a lot of brilliant and competent professionals – in the form of young and fresh talents and should be given a chance, or rather, the Government should start demonstrating more confidence in local intelligence. It is widely known and accepted that Guyanese intellectuals are far superior to foreigners in many respects. In fact, with regards to the fiscal framework, this author can provide a blueprint through a series of articles under this column; (2) in this article, the author hereby presents a number of excerpts from previous columns dating as far back in 2017, on those specific subject areas that the recent high-profile team of experts would have presented on – essentially the same things in the form of advice to the Government and the Guyanese people.
Starting with the British Professor of Economics, Sir Paul Collier who told members of the media fraternity that “the whole oil industry is going to tether out in 2040. You might be left with a great lump of technology off your shores which has no use”. He also suggested that the Government should not invest in a local oil refinery (INews, March 23, 2018). Readers of this column would recall that on March 4, 11 and 18, 2018, this column featured a series of articles on the “changing dynamics of global oil economics”, in the context of what it means for Guyana. In the concluding edition published on March 18, 2018, this columnist wrote: “…with reasonable certainty, one can safely presume that there may be a safe window period of another decade – maximum another two decades – in which crude oil will remain at sustainable prices. It is within this context that the oil companies would need to scale up production capacity – expeditiously – to 500,000 and even 1,000,000 barrels per day – at least within the first decade as well.
And finally, against the background of the analyses presented within this series of articles on this subject matter, it also means – conclusively – that Guyana’s oil industry is very likely to have a lifespan of only 20 years, and not 40 as others may tend to think or predict.” Readers can access the complete article and the entire series on the Guyana Times website here: https://guyanatimesgy.com/the-changing-dynamics-of-global-oil-economics-part-3/. So, this just validated the notion that this author predicted that the oil industry will not last more than 20 years maximum which would be by 2040 – same as the British expert predicted days after this series was published.
With respect to the oil refinery not being a feasible option for Guyana, on August 6, 2017, this columnist wrote: “The estimated cost of US$5.8 billion (to build a refinery) is more than twice the size of Guyana’s economy in monetary terms. The size of the economy measured in aggregate monetary terms is about G$509 billion or US$2.5 billion. This means, even if the Government of Guyana and the entire Private Sector form a public-private partnership to fund this project – they would still not be able to afford it. Further breaking this down for the ordinary citizens to understand; this simply means if you take all of the money – the total stock of money which includes sum total in the banking system and reserve money both locally and abroad, it would not be enough to build the refinery. Against this background, Guyana – both the Government and the Private Sector should not waste time dwelling on the idea of a refinery.” The complete article could be accessed here: https://guyanatimesgy.com/what-would-be-the-economic-impact-of-oil-on-guyanas-development/.
Next week, the author shall compare the quality of advice given by the experts on the Sovereign Wealth Fund against the series that was featured under this column on the SWF on January 14, 21 and 28 – February 4, 11, 18 and 25, 2018.
The author is the holder of a MSc Degree in Business Management, with concentration in Global Finance, Financial Markets, Institutions & Banking from a UK university of international standing.
