With the start of oil production Friday, the opposition Peoples Progressive Party (PPP) hailed the visionary leadership of then President Janet Jagan who moved to engage ExxonMobil and signed the initial contract in 1999; but the party issued a stinging rebuke of the current government’s management of the sector, calling it an abysmal failure.
The PPP, which was in government when the contract was signed and when oil was first discovered in early 2015, said Jagan’s visionary leadership was clear.
“Our nation owes a debt of gratitude to Janet Jagan,” the PPP said in a statement Saturday evening.
But the PPP said the current Coalition government has failed to manage the sector well.
“These failures range from the indefensible re-negotiation of the ExxonMobil contract in 2016, where Guyana was in a position of strength, having confirmed a find of three billion barrels of oil, to the fact that Guyana is still without the necessary architecture that would guarantee management of the oil and gas sector, where global best practices, transparency and accountability are the order of the day,” the PPP stated.
The party said the re-negotiation of the ExxonMobil contract was approached in a laissez-faire manner.
It again slammed the government for its initial denials of having received a signing bonus; this was only acknowledged after documents were leaked to the press.
The PPP said the US$18M signing bonus can be considered the most talked about consequence of a poorly re-negotiated contract, since Guyana could have secured a higher sum.
As such, the PPP questioned whether President David Granger can be trusted when he claims that the Coalition will “manage petroleum revenues prudently to ensure fiscal discipline.”
Further, the PPP said the government’s negligence has been demonstrated in the area of contract administration.
“Guyana has been saddled with US$960M in pre-contract costs, in addition to the US$10B development costs for the Liza 1 and 2 oil fields in the Stabroek Block operationalised by ExxonMobil.
“The process to ensure these are audited has been anything but transparent,” the PPP claimed.
Regarding the management of the sector, the PPP said Guyana is nowhere close to where it should have been five years since the oil find was confirmed in May 2015.
It noted that the Sovereign Wealth Fund was hurriedly passed by the APNU+AFC Coalition in the National Assembly, at a time when its authority was diminished as a caretaker government. It said the Fund is lax in several areas.
“The political influence that dominates this piece of legislation is far removed from what is global best practice.
“The Minister of Finance is overall in charge of the fund. The operational management of the Fund will be done by the Central Bank, which reports to the Minister of Finance.
“The Macro-Economic Committee is appointed by the Minister of Finance and chaired by the Ministry of Finance.
“The Investment Committee is appointed by the Minister of Finance and chaired by the Ministry of Finance,” the PPP stated.
In addition, the PPP noted that the Petroleum Commission, which was supposed to be the regulatory body, is non-existent.
Also, the PPP noted that the Local Content Policy is still not in place.
“This is one of the key means of ensuring that Guyanese benefit in a direct way from the operations in the oil and gas sector,” the PPP stated.
“…while ‘first oil’ should have fueled the hopes and aspirations of Guyanese across our country, given the opportunities in the oil and gas sector, it has morphed into a cause for greater apprehension about our future, due to the incompetence and corruption that the APNU+AFC Coalition has demonstrated in the developing sector over the past four-plus years,” the PPP further stated.