The PetroCaribe deal that facilitated the export of rice to Venezuela as a form of payment for fuel imported from Venezuela is an avenue that should be pursued as the highest priority.
The expanding foreign currency crisis in Guyana is in no small way linked to the unilateral cancellation by Venezuela of the PetroCaribe agreement between Vene-zuela and Guyana. Currently, Guyana must now pay full price in United States Dollars in advance to the Petroleum Company of Trinidad and Tobago Limited (Petrotrin).
In the latter part of 2015 and beyond, Guyana was unable to source significant amounts of its fuel imports at discounted prices and obtain generous credit facilities from Venezuela. This included an initial moratorium of two years on the financed portion of the fuel purchase, with the financed portion of fuel imports, ranging from 40% to 60% of the purchase price of fuel, repayable over approximately twenty-three years.
Also, the PetroCaribe rice offset arrangement generated increasingly high levels of rice exports at premium prices, where close to 500,000 tonnes of rice were exported by the end of 2014. It created increased employment opportunity in the rice industry and its many sectors, economic prosperity for many of our rice farmers and millers and acted as a key driver to boost the Guyana economy.
The economic downturn we are now experiencing could become exponentially worse. The sugar, rice and forestry industries are haemorrhaging and revenue from the huge oil find offshore Guyana will not be received until 2026, based on recent media reports and assuming anticipated revenue from oil production is not sold by the Guyana Government at a discounted value.
Information on the revenue sharing arrangement with Exxon is based on comments in the media from Minister Trotman, who clearly stated that Guyana will not receive any revenue from production until Exxon has recovered its investment cost. The investment cost is presently projected to be US$6 billion by the time production commences in 2020. Assuming production of 100,000 barrels per day starts in 2020 at current market prices, the US$6 billion in exploration and production costs will not be repaid until 2026. Thus, our Finance Minister must look to the most likely economic opportunities that will revitalize the economy over the next several years.
Recently the Democratic Labour Party of Barbados reached out to former Prime Minister of Barbados, Mr Owen Arthur, who held the post as Prime Minister from September 1994 to January 2008, and was appointed on March 1, 2017 as Chief Economic Advisor to the ruling administration. Owen Arthur is from the Barbados Labour Party, currently the major opposition party.
My recommendation is that the Guyana Government appoint two of our former Presidents, Mr Donald Ramotar and Mr Bharrat Jagdeo, who are both known to have very good relationships with the President of Venezuela, Mr Nicolás Maduro. The purpose of the appointments would be to reactivate the Guyana-Venezuela PetroCaribe agreement with the rice offset component. Sugar might even be added as an offset option for the fuel imported.
The economy of our Venezuelan neighbour is not going through the best of times; however, Venezuela has oil in abundance and their oil reserves amount to the largest proven oil reserves in the world. The reinstatement of the PetroCaribe and rice offset agreements between Venezuela and Guyana will certainly allow the Guyana economy to right itself and halt the decline in our foreign exchange rate, among other positive benefits.
Let us unite in our efforts for the benefit of all Guyanese. We are capable enough of dealing diplomatically with Venezuela’s spurious claims to western Guyana and large parts of Guyana’s Atlantic waters, while we seek economic trade arrangements with Venezuela that will benefit both countries.