Dec 25, 2016 News
By Kiana Wilburg
The impressive performance of Guyana’s gold and agriculture sectors coupled with the highly anticipated wealth to accrue from the oil industry, have all served to boost the nation’s image on the international stage.
Under new political guidance, these sectors are poised to not only transform Guyana’s growth structure but also guarantee the improvement in the nation’s management capabilities as well as its financial stability.
Here is an in-depth look at these sectors as well as their performance in recent times.
Agriculture accounts for approximately 25 percent of Guyana’s GDP and provides more than 33 percent of direct employment, both rural and urban. The sector comprises four principal sub sectors: sugar, rice, non-traditional commodities (fruits, vegetables, coconuts, herbs and spices, and livestock), and fisheries.
Government’s vision for Agriculture 2020 sees the sector continuing to play a premier role in transforming the nation’s development outlook in the medium to long term. It sees a sector that is robust, competitive, and capable of meeting Guyana’s food security requirements, generating sustainable jobs and contributing to exports and foreign exchange earnings.
This vision, cognizant of the risk of natural disasters and climate change, will be pursued by accelerating the modernization and diversification of the agricultural sector within a green agriculture framework. The Government has begun to explore suitable options to address the financing needs of the sector.
As for rice, this industry has been an amazing success story. The sector has recorded consistently higher levels of output, breaking the 400,000 tonne bar, in 2011, and the 500,000 tonne bar, in 2013. For 2014, rice output attained an impressive 635,238 tonnes, an increase of 18.6 percent. As buoyant as this new record-breaking output appeared, however, the warning bells were being rung of the industry’s inability to align output with domestic and external demand, resulting in the build-up of significant paddy stocks in the system – a situation that was compounded by unresolved issues such as outstanding payments to rice farmers.
In spite of the uncertainty that prevailed in the rice industry this year, recorded output was 687,784 metric tonnes, an increase of 8.3 percent. The premature end of the Venezuelan market, which accounted for 37.5 percent of the volume of rice exported in 2014, created great turmoil for both rice farmers and millers. The Government was proactive in its assistance to the rice industry – aiding in the search for new markets and meeting payments to farmers for rice shipped to Venezuela, which could not have been made from the PetroCaribe Fund.
In total, $20.3 billion has been allocated to the agricultural sector to create an economic environment in which farming and agro-processing operations can grow the economy and create employment. To this end, in excess of $598 million is allocated to enhance diversified agriculture in the hinterland, riverain communities and the intermediate and Rupununi savannahs.
In recent years, Guyana’s mining and quarrying sector has been dominated by gold and, to a lesser extent, bauxite. Even though the price of gold continuously fell in 2013, from its peak in 2012, there was cautious optimism that going into 2014, the industry would rebound. But in reality, gold production declined by 19.5 percent to 387,508 ounces.
In spite of the relatively low world market prices, gold production was poised to improve significantly in 2015/2016 and beyond. In fact, Canadian-based Guyana Goldfields Inc. announced production of its first quantity of gold from its Aurora Gold Mine, earlier this year. The company expects to produce between 120,000 ounces and 140,000 ounces of gold in 2016.
Guyana Goldfields Inc has generated permanent employment for a range of skills, including heavy -duty machine operators, cooks and suppliers of food items to the complex. At full operation in 2017, and with an expanded mill, about 500 persons will be permanently employed with another 500 temporary jobs created during the construction stages in 2016.
The provision of accommodation and related services by this company to their employees has also generated service-related jobs within the sector. Collections of royalties, taxes on income and insurance payments are expected to enhance revenue collections within the public sector, while increased production will augment the national current account.
Environmentally, the company will employ modern technologies to reduce environmental externalities. Another major investment, Troy Resources Limited Karouni Gold Project in Region 7, is also expected to commence work. Like gold, bauxite has continued to experience unfavourable global markets, resulting in both bauxite companies in the industry producing below capacity.
However, encouragingly, Canadian-owned First Bauxite is going ahead with opening a new mine in the Bonasika area, having recently completed the feasibility study for mining bauxite in that area.
In spite of the downturn in bauxite (13.4 percent) and quarrying (0.3 percent), the mining and quarrying sector grew by a strong 9 percent this year, thanks to a very dominant performance by gold, which grew by 16.4 percent.
In fact, Gold exports more than doubled compared with the first half of last year, rising from US$188.3 million to US$390.7 million. Though the increase in gold production was attributed to the new entrants – Guyana Goldfields and Troy Inc. – it was the local miners who accounted for over 90 percent of the 451,490 ounces that were declared. The significant incentives granted to the sub-sector by this Government, undoubtedly, played a major part in the substantial increase in declaration.
THE COMING OF THE BLACK GOLD
Ever since the announcement by major US Company, ExxonMobil that it had struck a significant oil find in Guyana. The US oil giant discovered oil-bearing rock in the Stabroek Block offshore Guyana.
Esso Exploration and Production Guyana Ltd has a 45 per cent interest in the block. Hess Guyana Exploration Limited holds 30 per cent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 per cent interest.
The oil company has made headway amid the border controversy between Guyana and Venezuela, where the latter remains adamant that the area where the US Company is drilling is within its territory.
In early March, the oil and gas company – one of the largest in the world – was warned by the Spanish-speaking country to refrain from going ahead with its planned exploratory drilling activity, on a concession awarded by Guyana offshore its Essequibo Coast. Guyana, however, requested that Venezuela not interfere in its development activities.
More than 18 major companies regionally and internationally have expressed strong interest in investing in the sector and hundreds of skilled persons in the area are on the hunt for opportunities to work in the oil-rich shores.
The Bank of Montreal is the latest international organization to provide assistance for the development of Guyana’s oil and gas industry. The Bank made a presentation on the likely financial impacts to members of the Government’s subcommittee on oil and gas in September last.
Minister of Natural Resources, Raphael Trotman, has announced that a policy is finally in place to help chart the course for Guyana’s developing oil and gas industry. Trotman said that the Ministry has been working overtime to get Guyana ready for oil and gas production. A team of experts comprising both Guyanese and foreigners is being assembled to guide Government on the way forward.
The Minister of Natural Resources said that persons are also being recruited and sent on scholarship programmes which focus on crucial areas within the sector. He said, too, that legislation is being finalized to reform the Petroleum Act so as to ensure that Guyanese benefit from the wealth that will accrue from the sector, and so that they can be able to participate in the industry.
The Minister said that moves are still being made with regard to the establishment of a Sovereign Wealth Fund, which he hopes can be named the “Roraima Fund,” which will serve to take care of future generations by ensuring that the wealth is not squandered.
Ambassador of The Kingdom of Netherlands in Suriname, Mr. Ernst Noorman, has also praised Guyana’s oil finds. He had even singled out Guyana as a “bright star” in the Region, noting that its political stability and current optimistic oil exploration activities make the country a boon to investors.
In an invited comment, Ambassador Noorman said, “If you look at the neighbouring countries, most of them are in quite difficult economic times and also politically it can be challenging for those countries. In that sense, right now, Guyana is a bright star. It has economic growth, there’s political stability, the prospect for the future with the oil find that means banks will be interested in investing in Guyana…the economic climate is much better than some of the countries in the area.”
The Dutch envoy was in Guyana for a week of meetings with several agencies and Ministries, including the Ministry of Public Infrastructure, which has benefited and will continue to benefit from expertise and advice to tackle flooding, especially in Georgetown.
During the meeting, several areas of mutual interest were discussed including the Guyana/Venezuela border controversy, the ExxonMobil oil find, climate change, infrastructure and drainage works, the clean-up of Georgetown, Guyana’s push for a ‘green economy’ and the concluded Golden Jubilee Independence Anniversary celebrations.
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