APNU/AFC failed to prepare for first oil – PPP


Following the announcement that first oil is here, the Peoples Progressive Party Civic (PPP/C) has lambasted the current administration, saying that they have failed to put the necessary systems in place.

See full statement.

ExxonMobil announcement that oil production has started from the Liza field offshore Guyana is testimony to the visionary leadership of the late Janet Jagan, former President of Guyana. Under the former People’s Progressive Party/ Civic (PPP/C) government, it was Janet Jagan who moved to engage the oil company and signed the initial contract in 1999.

Guyanese may recall that in 2015, during the tenure of the PPP/C, when the discovery of hydrocarbons was first announced, personalities like the Coalition’s Ronald Bulkan were dismissive. Bulkan had said, “It is part of a pattern of deception, born of desperation. It is a quantum leap when the company is talking of hydrocarbon and the PPP is announcing oil.” Despite the naysayers, the result of visionary leadership is clear. Our nation owes a debt of gratitude to Janet Jagan.

The declaration by APNU+AFC Coalition leader, David Granger, of December 20, 2019 as
‘National Petroleum’ Day’ as a reminder to Guyanese of their “duty to protect the country’s
patrimony” is as transparent as it is hollow. Having done nothing that resulted in  ExxonMobil’s work in Guyana, Granger’s four-plus years of being in charge of the oil and gas sector has proven to be an abysmal failure.

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 million 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 re-negotiation of the ExxonMobil contract involving compromised APNU+AFC Coalition
officials resulted in losses for Guyana and tops the list of the Coalition’s indefensible failures in the oil and gas sector.

It was only after widespread public criticisms, and with General and Regional Elections on the horizon, that the Coalition’s Raphael Trotman proffered an insincere mea culpa – accepting that the re-negotiation of the contract could have been approached differently, while blaming the technical staffers of the Guyana Geology and Mines Commission

Trotman, in July 2019, stated that, “At all material times, I acted on the advice and
direction of the GGMC…I relied on the officers at GGMC at all times and was advised when
the agreement was ready for signature.” As the incumbent’s representative, then, with
responsibility for the oil and gas sector, how could Trotman expect Guyanese to accept the fact that all he did was act on advice and sign the agreement when it was ready? If this is the best excuse he could offer, the question that must be asked is how could the renegotiation of the ExxonMobil contract be approached in such a laissez-faire manner and with such indifference?

The receipt of a 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. However, on this matter, the Coalition’s proclivity for operating in the dark was exposed, yet again. Guyanese can only conclude that this inclination was to allow for corrupt dealings, given the vehement denials from Coalition officials about the actual receipt of the signing bonus.

The most infamous was the denial by the Coalition’s Winston Jordan. Kaieteur News on, November 23, 2017, quoted Jordan as saying that: “Such a claim is ‘a figment of the imagination” and that there is “no agreement for any bonus.” The US$18M was, in fact, received a year earlier, since September 2016.

The Guyanese people were only made aware of this fact in December 2017. Guyana’s national budget estimates for 2017, 2018 and 2019 did not reflect receipt of the US$18M, which is what should have been done.

How then can Granger be trusted when he claims that the Coalition will “manage
petroleum revenues prudently to ensure fiscal discipline” when Guyanese are aware of the
evidenced failures with the first receipt of oil monies?

Further, the negligence that has been demonstrated in the area of contract administration, which is where Guyana could work to increase its share of profit oil, even with a poorly re-negotiated contract, is also worrying.

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.

Relative to the architecture of the management of the sector, Guyana is nowhere close to where it should have been five years since the oil find was confirmed in May 2015.

First, Guyana has a Sovereign Wealth Fund that was not only hurriedly passed by the APNU+AFC Coalition in the National Assembly, at a time when its authority was diminished as a caretaker government, but 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. These are only a few concerning examples. An arms-length approach involving politicians ought to have been a critical element of the Sovereign Wealth Fund.

As such, Granger’s comments on the use of monies from the Sovereign Wealth Fund and “prioritising investments” in key sectors fail to inspire any confidence.

Secondly, the Petroleum Commission, which was supposed to be the regulatory body, is nonexistent. The APNU+AFC Coalition seems to have replaced that body with the Department of Energy, which reports to the President.

Thirdly, after five years, there is still no Local Content Policy. 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.

Ignoring this fact, the Department of Energy head, Dr. Mark Bynoe, attempts to sell pipe dreams to Guyanese, saying that “It is also imperative that as Guyanese we begin to appreciate that the direct and indirect benefits from this sector will go far beyond anything that we have seen to date.” If there is no framework to facilitate Guyanese in the sector, how can this be a reality?

All considered, Granger’s claim that “Guyana’s future is brighter with the beginning of first oil” rings hollow.

The appropriate policy environment has not been created.

The PPP/C has made it clear that the entire architecture for proper and transparent management of the oil resources will be completed in six months after it wins the March 2020 General and Regional Elections.

There are still many questions about what remains to be done, including as it relates to the
remaining oil blocks. Will these be subject to a competitive bidding process, so that Guyana can secure the best deal? The PPP/C has already said that it will do so after taking office.
What is clear is that the Granger-led APNU+AFC Coalition has not worked to ensure Guyanese benefit fully from ‘first oil’ or the oil and gas sector for that matter. Instead, he is attempting to lull Guyanese into the belief that with ‘first oil’ here today, we are going to be prosperous tomorrow.

The other controversial issue is the move to sell Guyana’s share of ‘first oil’ that is lifted by
ExxonMobil. It should be a source of shame that it was the international media house, Bloomberg, which exposed the APNU+AFC Coalition’s plans to approach traders directly, ‘face-to-face’, to conclude deals for them to buy Guyana’s oil and sell it.

Granger is a caretaker president who is heading an unconstitutional government since March 21, 2019. His Coalition’s purpose in office is the holding of General and Regional Elections, not to bind Guyana to ‘shady agreements’ that would see our people losing more.

The question that must be asked is why is there a rush to tie up an agreement for the sale of Guyana’s share of oil? As a caretaker president with a government that lost constitutional cover months ago, Granger should be ashamed to have made a proclamation about ‘National Petroleum Day’, considering the Coalition’s unenviable list of failures in the oil and gas sector. More so, he should be ashamed that his declaration came on the anniversary of the successful and valid passage of the no-confidence motion, which resulted in the fall of his APNU+AFC Coalition government.

That said, 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.

Guarantees that petroleum production will be transformative for Guyana’s economic development and that it will improve welfare and the prosperity of our people are non-existent.

Instead, Granger continues to tout his vague ‘Decade of Development’ mantra as the panacea for finally fulfilling the ‘good life’. It also exposes his penchant for declaratory statements and sloganeering – rhetoric that is exposed as such, since ‘first oil’ has nothing to do with any effort on his part; instead, what obtains under his stewardship is a plethora of failures. Granger’s record in office, even outside the oil and gas sector, reflects the same story: increased borrowing; increased tax collection of $88M more annually, compared to 2014; wasteful spending and depletion of our reserves; deterioration in the delivery of public services, more so in the health sector; no plans for housing; increased cost of living; escalation of crime and more. Granger ignores the fact that development, success and prosperity are the result of positive policies – something his Coalition seems incapable of formulating.

His fixation on ‘good life’ speeches will not translate into progress and prosperity for our people; the hard work has to be put in. There can only be positive advances if the oil monies are well managed and the APNU+AFC Coalition has demonstrated its inability in this regard.

Months out from the March 2020 General and Regional Elections, the PPP/C has already made public details on its plans for the oil and gas sector, with in-depth policies and initiatives to be disclosed when the Party’s 2020-2025 manifesto is launched in January 2020. We urge all Guyanese to read our eight-page excerpt of the manifesto, which details elements of our planned approach to the sector on issues that include transparent management and a strong regulatory body, as well as plans for the use of resources from the oil and gas sector.

The choice ahead of our people is a clear one.