Jagdeo urges in-depth review of NRF managers’ track record

– suggests potential firms to manage oil wealth be pre-qualified

Opposition Leader Bharrat Jagdeo is urging that a comprehensive look be taken into whichever firm is brought to manage Guyana’s oil and gas revenue, noting the dangers of entrusting Guyana’s patrimony to the wrong people.
Jagdeo spoke on the matter during his recent press conference where he was asked to comment on the possibility of US investment firm Merrill Lynch coming to Guyana.
While he did not reference that firm, Jagdeo issued a general warning of the need to beware opportunistic companies looking to make a profit at Guyana’s expense.
“We have to learn to sift them through, look at their CVs, their track records, who delivers the greatest returns if we’re looking for fund managers, who delivers the greatest returns on funds managed over a long historical period, who has pretty safe investments.”
“All those things have to be (factored in). Right now, you’re going to have everyone under the sun coming here to try to be the fund managers,” Jagdeo, a former President and Finance Minister, explained.
Jagdeo recommended that prospective fund managers should be prequalified after being screened and have their background checked out. He suggested that once this is done, Government make its sale pitch to each of these companies, hear their feedback and decide which will be more beneficial to the country.
“So assuming someone says I want one per cent as a fund manager, and another person equally qualified and great track record says they’ll take 0.5 per cent. Then you take that (person). Government has to lead the process, but it must be transparent,” he said.
Merrill Lynch has for some time expressed an interest in being involved in managing Guyana’s oil finances. In fact, representatives from the firm had reportedly met with Central Bank Governor, Dr Gobind Ganga.
After its 10th discovery of oil in the Stabroek Block, ExxonMobil has estimated the recoverable resource in the block to be five billion oil equivalent barrels. In addition, an independent assessment, or competent persons report, had found that 2.9 billion barrels of oil existed in the Orinduik block.
All of this will represent a monetary windfall for Guyana, which will be saved and invested through a natural resources fund. A green paper on the fund was recently laid in the National Assembly, but the fund itself is still in its planning stages.
Government had released the draft Natural Resources Fund Bill of 2018, which had proposed among other things a 22-member public accountability and oversight committee that would oversee the management of the fund and provide checks and balances.

Bank withdrawals
Jagdeo also spoke of the withdrawal of certain international banks from Guyana. According to Jagdeo, the withdrawals of Scotiabank and Bank of Baroda from local operations must have had something to do with the institutions’ own research into Guyana and its prospects.
“Look at the signal that the banks are sending. I said at the speech I had recently, we all share the view that oil will be transformational. And it should be. What I don’t share with [the A Partnership for National Unity] APNU is the timeline. They’re making it look like in 2020 things will be transformed here. And it will not. Most people in the know understand that.”
“It’s not going to happen in 2020, because the resources coming in are not that great, until you get to 2025. And that also presupposes that you move on to do the other oil fields, not just Liza 1,” Jagdeo said.
According to Jagdeo, Guyana has already started suffering from lack of focus on other productive sectors which have shown declines. This, he noted, is a well-known symptom of the Dutch Disease and Guyana has not even reached first oil. Then there are other economic issues he identified.
“(Government is) borrowing domestically, which will have a big call on the resources coming in in 2020, because the magnitude is so great. So that’s what we have. Just imagine two major banks are leaving Guyana when we are talking about this big boom happening (surely) everybody would want to be here because we’re supposed to see a big economic expansion.”
“Now part of their leaving Guyana is de-risking, but part of it… no one leaves a gold mine. Their internal assessment must have shown that it (transformation) is going to happen over a longer period. And they make their economic decisions,” the Opposition Leader related.