…“Guyana’s drive for investors remains fruitless” – US report
While the coalition Government has bragged that it was able to attract billions in investments for 2017, both Opposition Leader Bharrat Jagdeo and a United States Department of State report for last year refute this assertion.
In a November 12, 2017, column entitled ‘A fresh message of hope to drown out the noise’ Prime Minister Moses Nagamootoo boasted of 240 investment projects worth $187 billion in Guyana that are “now moving through the pipelines”. Then, in his January 14 column ‘My Turn’, the Prime Minister assured that $187 billion in investments were facilitated by the Business Ministry last year.
This time, however, he stated that investment agreements were entered into for 136 projects. Very little specifics were offered and at a recent press conference, Jagdeo took the Prime Minister to task for the unsubstantiated and in fact conflicting figures he quoted.
“I saw it said; new jobs are being created, not to lose hope. That is what Prime Minister in his column told sugar workers. And this is what he said. Investment agreements were entered into for 136 projects valued at $187 billion, via the Ministry of Business, last year.”
“Can you tell me where (is) this $187 billion of investment we got?” Jagdeo questioned. “And how many jobs have been created? In fact, we have lost jobs, about 25,000 jobs, since this Government took office. We’re haemorrhaging jobs every single day, because of the state of the economy.”
Noting that this was equivalent to US$2 billion in projects, Jagdeo questioned the veracity of the quoted figure. He urged Business Minister Dominic Gaskin to come clean and explain specifically which jobs were created.
“If you look at the balance of payment, you have an anaemic sum coming in. It’s dropped. Foreign direct investment has fallen dramatically,” Jagdeo said, adding that the coalition remains reliant on projects and investments attracted by the former administration.
Prime Minister Moses Nagamootoo
US report
Meanwhile, the 2017 US State Department’s Bureau of Economic and Business Affairs investment climate report on Guyana has declared that the country’s long-term efforts to attract investors remains largely unsuccessful.
According to the report, the Government does indeed publicly encourage Foreign Direct Investment (FDI). But it noted that success outside of Guyana’s extractive sectors remain limited.
“Foreign Direct Investment (FDI) into Guyana is actively encouraged and seen by the Government of Guyana as critical to Guyana’s economic development,” the report states. “Numerous incentives are offered to investors. Despite these incentives, Guyana’s long-term record in attracting Private Sector investment remains poor.”
The report acknowledges the existence of the Guyana Office for Investment (Go-Invest) and noted that new management, such as a Board and Chief Executive Officer, were recently appointed. It also acknowledged that incentives are provided for foreign and domestic investors, like duty-free concessions.
“Over the past decade, the [Government of Guyana] GoG enacted new laws or amended existing ones to encourage FDI, with mixed levels of success. Due to the State’s significant role in the domestic economy and the preference for centralised decision-making, relatively large foreign investments often receive intense political attention.”
“The current Administration is roundly criticised for its poor record so far in attracting new FDI, even though leadership signalled its intention to attract FDI through its various Embassies and Missions abroad,” the report observes.
Amaila
According to the US State Department economic bureau, “political gridlock and infighting” is to blame for hampering Guyana’s development efforts in several instances. Relative to this, the report cites the example of the Amaila Falls Hydropower Project (AFHP), which the coalition Government has officially abandoned.
“The Amaila Falls Hydropower Project (AFHP), which would have been the largest capital project in the country’s history, fell apart after a decade of planning when the US developer and equity partner withdrew from the multinational development team in August 2013.”
“The company expressed concerns over political risk following objections to the venture by the then-Opposition party APNU,” the report continues. “The Norwegian Government subsequently conducted a new feasibility study on the AFHP and submitted the report to the Government.”
This is a reference to a report from Norwegian international consultant Norconsult. The new report had in fact concluded that the Amaila Falls Hydropower Project (AFHP) was the only realistic way for Guyana to achieve an emission free electricity sector. Norconsult had noted the merits of the project, such as its completed feasibility study and a higher plant load than the other alternatives.
However, the report had recommended the BOOT (Build, Own, Operate and Transfer) public private partnership model is used. The consultant had urged that an international investor specialising in hydro power be invited to take a majority stake in the project. It is unclear whether this advice has been acted upon by the Government.
The report states; “The only realistic path for Guyana towards an emission free electricity sector is by developing its hydropower potential. The fastest way forward is to maintain AFHP as the first major step for substituting its current oil fired generation. AFHP was prioritised as the first hydropower plant because it was the only project with a full feasibility study completed; it has a higher plant load factor than the alternatives, a smaller reservoir and a unit cost in the same range as the most attractive alternatives.”
In the absence of Amaila, the US State Department report acknowledged the Government touting other areas and renewable energy sources. It noted that if potential renewable energy projects are successful, this would promote more investments as high energy costs are barriers to value added investments.
