Jan 22, 2018 News
…we must figure out how to defeat them-Dr. Clive Thomas
By: Kiana Wilburg
Since the release of the 2016 Production Sharing Agreement between the Government of Guyana and USA oil giant, ExxonMobil, critics who have given the contract a thorough review believe that the nation was shortchanged; that the contract is more generous to the oil operator.
These opinions have been expressed by the International Monetary Fund (IMF) and even Chartered Accountant and Attorney-at-Law, Chris Ram, among others.
But economist and Presidential Advisor on Sustainable Development, Dr. Clive Thomas shares a different viewpoint. Professor Thomas is of the firm belief that no contract is perfect before it is executed. He told this newspaper that there needs to be empirical evidence showing that the contract has not worked for Guyana otherwise, everything else would be speculation.
The Presidential advisor said, “I can’t say if we have a good deal or not because we have to see it fully executed. You can’t condemn the contract until you have evidence to justify same; if you don’t have empirical evidence that it is failing us then what are you using as your evidence to say it is bad? This is not my backing the government. The country wants to do well and push its talent; we need comments which have nothing to do with massaging anyone’s ego.”
“We make these constructions about the ideal contract and what it must have, but a mental construction is far different to a real life one; the former is only useful in so far as it can help us. You will want to improve the contract all the time. But I find that there isn’t an intellectual contribution on how we can find solutions and what these solutions can look like. We place focus on the problems and in doing so, we devalue the debate on oil and gas…”
The economist said that citizens must understand that Guyana’s contract with ExxonMobil is a unique one; one that is designed for the country’s circumstances and its environment. He said that there is also need for some to understand that the people who are engaged in the contract, hold different motivations.
Dr. Thomas said, “I call it the Principal (Government) – Agent (Oil operator) problem and the motivations on both ends are diverse. Exxon wants to make money and we can’t expect the Principle to say (to them) don’t make money; that is their primary goal. We expect ExxonMobil will try to rob us as much as they can so it is now on us to figure out how best we can defeat them. It is a waste of time at this point saying that they can rob us. That is ABC. That is known. Let us start looking for solutions and safeguards. It is useful in this regard to point out the errors made by other countries and how we can be able to do better.”
The economist stressed that while it would be wise to reflect on the mistakes of other countries, it should not be perceived that that is the direction Guyana is heading in. He said that lessons from other nations should be used to help Guyana determine how it can avoid similar scenarios.
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, as the company described itself, expressed interest in Chad.
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 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), C 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.com/category/what-guyana-needs-to-know-about-exxonmobil/
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