President David Granger on Friday said all matters regarding the oil and gas industry have been transferred to the newly established Department of Energy (DoE).
The Head of State was speaking to the media on the sidelines of the opening of the 50th Meeting of the Council of Legal Education.
The president told journalists that the proposal put forward by economist Dr Clive Thomas last month, that there be direct cash transfers to citizens from the expected oil and gas revenues, will be discussed by Cabinet if it receives a recommendation from the Department of Energy.
Early last month, while addressing community members in Buxton, East Coast Demerara, Thomas said the government should consider annual cash transfers of $1Million (US$5,000) to citizens.
President Granger had later said that there was no evidential basis for the suggestion and indicated that the proposal was not made to him by Dr Thomas.
The Head of State had said that the proposal for direct cash transfers falls outside of the recommendations of the Natural Resources Fund.
The recently established Department of Energy falls under the Ministry of the Presidency and will focus primarily on the country’s burgeoning oil and gas sector.
Every since the idea was floated by Dr Thomas, experts and observers have raised speculations over such a move.
Former advisor to the President Jan Mangal in a social media post made his views known, where he articulated, among other things, that “One way to influence the people is by direct cash disbursements to the people. Give people a couple hundred US dollars a year and they may no longer care if the royalty is 2% or 15%. Hence, we have to be careful. Direct cash disbursements have an important role to play in the future (as some have been discussing recently), but not now as an election variable, and not now as a distraction for the people. We need to focus on the more important prize, which is clawing back more of our wealth for ourselves, and also securing that wealth.”
Moreover, warning that this is just another false hope being peddled with the probable intention of garnering political support, Opposition Leader Dr Bharrat Jagdeo had said that monies accumulated from oil alone cannot deliver on that promise.
He explained that if 200,000 households were to benefit from US$5,000 annually, that totals some US$1 billion, but Guyana will receive less than that.
“That is over 300 per cent of what we are collecting. How could US$1 billion be 2 to 5 percent of total revenue? And that is in the newspaper and nobody challenges it,” he declared.
“It is just like people are just saying these weird things and (they pass) off for analysis and good economics; and there is a whole debate surrounding it. Just look at the numbers!” he admonished.
Jagdeo reminded that, given the expenses to be repaid to ExxonMobil for oil production, along with the need to service the Natural Resource Fund, there will be no money to give out.
He noted that it could take as much as five years before Guyana starts to see major earnings when oil production starts in 2020. This is based on projections that 75 per cent of revenues would cover most of the cost of production, including a US$460 million pre-contract cost.
“That’s why most people believe we are not getting big bucks until 2025. That’s when you start getting more money, not 2020! I pointed this out already,” he stated.
Jagdeo noted also that, in the early years, Guyana is projected to collect some US$300 million.
He is in favour of conditional cash transfers as a means of improving the livelihoods of Guyanese, as opposed to simply distributing money when oil revenues begin to flow. “I support conditional transfers. We’ve done that before, and we need to help poor people,” he said.
Asked to elaborate on the Opposition’s utilisation of conditional cash transfers while in Government, Jagdeo referred to a G$50 million partnership with the Guyana Bank for Trade and Industry Limited (GBTI) on the Women of Worth (WoW) programme. This, he said, was an initiative through which single-parent women could receive interest-free loans.
He suggested that as a means of introducing concessional transfers, pensioners could also be given a tiny amount every month, to enable them to get tested for diabetes, hypertension, and other non-communicable diseases, to reduce the cost burden on the health sector.
The Opposition Leader has put forward other issues he had with the idea of cash transfers, and recommended that portions of the oil revenue be injected into education and job creation.
He said, “What about the years when oil prices sink so low…for long periods, like it has happened in some countries, and people….think they’ll get this money all the time? We have to help them create jobs, we have to help them with education.”
He continued: “So why not put the money into paying for scholarships? We take G$100 million or G$50 million and we put it to help our kids who do well go to the best universities around the world; and upgrade our university to a topnotch university with a global standard by bringing in new lecturers. That sort of thing would help us in the long run.”