Jul 06, 2016 News
Even though Guyoil has performed creditably over the years, Finance Minister Winston Jordan is of the firm belief that the company must strengthen its governance practices. Significantly too, the Minister stressed that it must crackdown on the importation and distribution of illegal fuel.
Jordan however acknowledged that Guyoil is making moves to reshape its structure. In this regard, he believes that it will therefore be in a better position to face the future, emerging as an efficient business, growing steadily and progressively, and capable of outlasting the competition. He also said that the company must strive to follow a sustainable development model that focuses on environmental safety, communities and governance practices.
“Today, our priority task is to further enhance Guyoil’s effectiveness and competitiveness in the local market. And for that, we need to encourage the use of modern governance and management standards, and the use of advanced methods for the distribution of fuel and expansion of the market.”
Additionally, the Finance Minister explained that Guyoil must be a part of the process in helping to develop the country’s indigenous non-oil energy sources.
“They may want to start testing cars that run on fuels other than fossil fuel and cars that get more miles per gallon of fuel. Fuel-efficient cars, such as the hybrids, represent the future of the auto industry. Guyoil should therefore strategize on how best it could collaborate with the Guyana Sugar Corporation to develop ethanol as an alternative fuel.”
Looking beyond 2016, the Finance Minister said energy and energy policy are key issues when discussing economic development. He said that it must be tackled as a whole in order to find the balance between a policy that guarantees profitability to a company that sells oil products and a policy that takes account of market forces, the volatile nature of fossil fuel markets, and seeks to reconcile oil production with the development of other indigenous sources.
The economist noted that as Guyana approaches a future filled with the bountiful prospects and benefits “black gold” will bring, it is important to note that Guyoil will have an important role to play. He also sought to reflect on the entity’s contribution to the economy.
“I am pleased to say that in all respects, Guyoil has performed creditably. At a time when a large number of public enterprises have become extinct, Guyoil stands out like a financial beacon in an ocean of economic woes by those that have remained. Guyoil has always enjoyed an operating surplus,” the Finance Minister reflected.
He opined that many may scoff at this achievement, claiming that it is a ‘buy and sell’ company. But, in the context of the trials and challenges experienced over the last 40 years, Jordan said that this is no easy feat. He noted that in 1980, Guyoil sold oil valued at $49 million.
By 1996, the twentieth year of its establishment, Jordan related that Guyoil had spent $2.7 billion to realize sales of $3.9 billion. He said that after honouring all of its expenses, the company realized a profit of over $400 million. This trend, he noted, has been maintained with sales soaring to $44.3 billion in 2013.
“In terms of volume, our fuel consumption has changed remarkably. Whereas, in 1994, we consumed 363,340 barrels of fuel, comprising mogas, kerosene, gasoil, fuel oil and lubricants, by 2015, this had risen to 1,316,875 barrels, driven largely by the explosion in the mining and transportation sectors. I may add that these numbers do not capture other fuel importers in the system.”
“With the difficult task of mobilizing savings and other resources to finance our Good Life programmes, I am heartened by Guyoil’s contribution to the national coffers, over the years. Indeed, during the last fiscal year, Guyoil contributed over $2 billion in taxes and dividends to the central government revenues, making Guyoil easily the largest contributor among the public enterprises.”
In addition to the impressive statistics and achievements, the Finance Minister said that Guyoil has been able to keep prices below those of its competitors and has developed a reputation as a reliable supplier of quality products.
He noted, however, that it is important for all to bear in mind that lowering dependence on oil is an ecological necessity, and a technological challenge which Guyana’s economic policy cannot sidestep.
The economist said that this is why the government is developing strategies for a “green” economy. These strategies, he said, will in the long run, lessen the dependence on imported fossil fuels while diversifying the nation’s energy mix.
While government continues to explore options for renewable energy, Jordan said that improved energy efficiency should not be overlooked, as it offers a means of facing the country’s challenges head-on.
He noted that Guyoil is an important component of the country’s national energy system and given its significant economic linkage, the entity can be used as a platform for socio-economic development, while redefining the country’s energy landscape.
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