Don’t compare yourself to Brazil, Norway; examine nations with weak institutions -World Bank official
Feb 11, 2018 , https://www.kaieteurnewsonline...world-bank-official/
By Kiana Wilburg
Policy leaders here have assured the citizenry that they are paying attention to the lessons of other nations in the oil and gas industry. But which lessons are they actually paying attention to? Is it Norway’s? If that is the case, would the lessons of Norway and the models they have used, be applicable to Guyana’s circumstances?
Not necessarily says World Bank Senior Country Officer, Pierre Nadji. He was one of the eminent minds at the recently concluded Guyana International Petroleum Business Summit (GIPEX).
There, Nadji said that there are some fundamentals every nation should know as it enters the oil and gas sector. He said that this includes determining the impact oil revenues would have on the economy, having the right institutions in place, capacity building, and bringing the right external expertise that will put Guyana on the right track.
Nadji was careful to note that preparing for an oil industry is no easy task. He said that there are many countries which can testify to this such as Trinidad and Tobago which had its good and bad years.
The World Bank official said that there are cases of institutional building going on in Ghana, Senegal and Kenya. He said that these are countries with challenges both in capacity and weak institutions. He said that Guyana should not necessarily look at the Norway experience, and that of Chile and Brazil which have “solid institutions”. He said however that Guyana should get lessons from countries all around.
Nadji said nonetheless that the World Bank is here to support Guyana and they are pleased with the discussions taking place at all levels.
ASSURANCE
The lack of oversight by Governments along with the blatant misuse of resources, have left many oil rich countries either unable to show a significant improvement in GDP growth or, worse off than they were before the discovery of oil.
Business Minister, Dominic Gaskin, has since assured the citizenry that the Government has paid attention to such lessons around the world. He emphasized that the Government would ensure that Guyana walks a different path; one paved with transparency and accountability.
Gaskin said that the Ministry of business is pleased to be associated with this event. The politician believes that once properly organized and instituted, the summit can be of benefit to a number of stakeholders and to the country in general.
The Business Minister said, “For us, we see this as a major international event; one that can be used to promote Guyana as an emerging oil and gas producer. It is an opportunity for the government and the private sector to work together to showcase this country as a pro-business destination; as a place where things are happening; where investors are welcomed and a place with a bright future.”
He continued, “It is an excellent networking opportunity for the private sector. But we have had some worry in the sector that Guyana’s inexperience in this industry may lead to it getting the short end of the stick. But I would like to say that I don’t think that is going to happen.
There are a number of interventions that are being made and measures that are being put in place to ensure that Guyana and Guyanese are the main beneficiaries of all that is taking place offshore.”
Gaskin added, “And in that regard, we had in the last few years, some amazing results coming out from the exploration offshore and it augers well for our future. Not everyone feels this way but it is happening before our eyes…
“We must understand that yes, there are pitfalls in the oil and gas sector. And yes, many countries have not been able to reap the maximum benefits of their natural resources. But I think we have heard a lot about this and we have learnt a lot about this from others. We don’t intend to make those mistakes and I can give that assurance.”
RESOURCE CURSE
The Business Minister also reiterated that the Government is working towards ensuring that all of the necessary mechanisms are in place so that Guyana is not plagued by the resource curse.
The resource curse is a term that has often been used to describe nations which have an abundance of resources yet there is no real economic growth taking place. In fact, nations plagued by this problem even see worse development outcomes.
In his 2018 budget speech, Finance Minister, Winston Jordan, said that while the Government continues to build capacity for effectively managing and regulating the oil and gas sector, it will ensure that systems and regulations are in place to properly and transparently account for, and manage oil revenues.
In this regard, he said that an oil and gas unit will also be established within the Guyana Revenue Authority (GRA). The economist said that the Unit will benefit from extensive training in revenue administration within the context of Production Sharing Agreements. The Finance Minister stated that the prudent management of these revenues, in addition to a well-thought out development plan, will help to guard against the resource curse.
According to GRA’s Commissioner General, Godfrey Statia, training for the Oil and Gas Unit is set to commence in March 2018 with the staff being identified prior to this date. Statia said that the majority of the staff will be external and applications will be invited this month. The tax chief said it should be noted that this unit will initially be under the Large Taxpayers’ Unit and later spinoff as activity increases.
MISTAKES
Last year, Kaieteur News carried several articles highlighting how the governments and the citizenry of quite a few nations paid greatly for mistakes made with oil and gas. Take Chad for example. This Central African nation is considered to be one of the poorest and most corrupt countries in the world. When news surfaced in the early 2000s that it had struck oil, everyone thought that this should have been an instant blessing.
In spite of being landlocked and dirt poor, the kind and compassionate ExxonMobil expressed interest in Chad and demonstrated this to a great extent. So great were the contributions that Chad’s President, Idriss Déby, threw out two other oil companies that were operating in the country at the time and decided that Exxon was to be dealt with solely.
In the beginning, oil seemed to be a tremendous economic turning point for the Central African nation. The country earned billions of dollars in revenue; about US$9B to be exact. But with all that money in its pocket, Chad it seemed, ended up in a situation of ‘more money more problems’.
Instead of oil revenues being used to increase poverty alleviation and improve public services like education, infrastructure, and healthcare—It brought instead, more corruption, pollution, and the misuse of natural resources.
According to the 2004 Corruption Perception Index (CPI), Chad was ranked as the third most corrupt out 142 countries. The next year, it was ranked as the most corrupt out of 158 nations. Ten years later, Chad placed among the top 20 most corrupt nations on the CPI.
Additionally, the World Bank in one of its reports on this nation found that Chad’s oil failed to reduce poverty, but instead became associated with increased civil conflict and a worsening of governance.
In short, Chad is worse off than it started. To read more in this regard, follow this link: https://www.kaieteurnewsonline...ow-about-exxonmobil/