The continued absence of a framework for the predictable oil and gas sector is a major cause for concern, says Opposition Leader, Dr Bharrat Jagdeo.
He was at the time addressing the audience at the Commissioning of Mohamed’s Enterprise laydown facility on Sunday, when he noted that this framework, which Government had promised to work on, includes an independent petroleum commission, a Sovereign Wealth Fund, auctioning of future oil blocks and also Local Content Legislation.
Jagdeo asserted that the entire country is calling for clarity on several matters regarding this specific sector and as such, he feels Government should take the lead and provide an environment that will be predictable and conducive to investment from local and international companies.
“All I’m doing is making a case to plea for more investments of this nature…that we have greater clarity in defining the framework within which we are going to develop this industry because that is essential for ordinary Guyanese. They need a clear vision of how they will benefit from this, as well as our business community,” he stated.
Making reference to the controversy surrounding the ExxonMobil contract, Jagdeo posited that assuming that it is a done deal, Government has said future contracts will not share or enjoy the same terms that was concluded in that deal with the United States (US) oil major.
“So, almost two years down the road, we are yet to see a framework that will define what future contracts would look like. What is it that ExxonMobil got that future investors will not, and what they did not get that we may want to give?” he questioned.
Further, the Opposition Leader noted that in the absence of information, not only could it affect investments here, but people coming to negotiate new deals now, “they will cry out for that clarity because they are unsure of what future negotiations would be like.”
Another important issue, he noted, that needs greater clarity is how the role and function of the Energy Department differs from that of the Petroleum Commission.
“What are the Terms of Reference for the Energy Department versus the Commission? And would there be an overlap? Would one just be policy making, and the other be the functional, technical arm for oil and gas dealers? Or would the Energy Department have an operational role? I hope that they will bring some clarity to this too,” Jagdeo added.
Meanwhile, commenting on recent talks of Government preparing to invest in shore-based facilities, the Opposition Leader touted that according to information he received, there would be an investment just North of the Berbice River Bridge. However, he said that at other times, there were talks about other locations being involved.
According him, investors would need clarity on whether Government will take shares or be co-owners of shore-based facilities in the future.
He said, “If the Government decides to do this, this might be to the exclusion of the Private Sector and if it does, where it could be located… because the worst thing that could happen is if that is located elsewhere and leave all these investments stranded that are being made here in the Demerara River.”
The People’s Progressive Party (PPP) General Secretary also made reference to Government’s failure to establish a Sovereign Wealth Fund. He said there is need for clarity on how it will be managed, shielding it from political control and the use of the resources.
Importantly also is the establishing of a Local Content Policy for the sector.
Jagdeo said although President David Granger has promised that his Government will put forward legislation in relation to this soon, he said it would be worthwhile to know about the nature of the legislation.
“How much premium will it give to Guyanese investments and how will it define Guyanese investments? What position will we give if we go to regional investors… that are important too, particularly from Government,” he further added.
Jagdeo said although there have been discussions surrounding plans for the remaining oil blocks; Government still needs to state its own position. “Are we going to be bidding or are we negotiating on the first come first serve basis when it comes the oil blocks?”
Most importantly, however, the Opposition Leader said clarity is needed on taxes for the oil and gas sector. Having met with several people in the local business community, Jagdeo said there seems to be some new interpretation of what are the tax laws in that regard.
“And if we don’t have clarity about that, then you create an unsettling environment for Private Sector development… Because again there is not that element of predictability.”
Jagdeo said too that while the PPP feels that Government must make use of the opportunity of the oil industry to improve Guyana and its people, it must not be forgotten that oil is a wasting resource and it has a finite life.
He said Government must also bear in mind that a plan for the future is needed.