Feb 19, 2021 News
Kaieteur News – The oil and gas sector can be considered a double-edged sword. On one side, the sector can bring enormous wealth to a country and can sustain the economy for generations to come. On the other side, however, some unfavourable consequences, like corruption – a form of dishonesty that the oil sector is most notorious for.
With this in mind, Rudolf Elias, the Chief Executive Officer (CEO) and Managing Director of Suriname’s state oil company Staatsolie, says that a national strategic plan on how the oil monies are spent, plays a key role in keeping corruption at bay.
Elias shared these and other critical points during his debut appearance on the Kaieteur Radio programme, Guyana’s Oil & You, on January 4.
There, the Suriname Oil Boss was asked to share some of the systems Staatsolie has in place to ensure that it prudently manages the massive oil wealth, as well as corruption.
Elias reminded that as an implementing country of the Extractive Industries Transparency Initiative (EITI), Suriname is required to provide reports on how money from its oil sector is spent. To this he explained, “Let’s say for health or they want to spend the money on infrastructure or they want to spend money on education, then they have to also show [how] they spent the money. That is one of the things where you can say ‘Okay this might be able to set aside corruption’.”
But what Elias says is a more important strategy, is for the government to make budgets in advance and then strengthen the institutes where it will spend the budgets in the coming five, ten or 20 years.
He went on to articulate, “If you have these projects running, it is a lot more difficult to have corruption as [compared to when] the Minister of Finance puts $100M for education, but they have a clue how to spend it. This is what brings corruption because when the next year when the other $100M comes, maybe they could spend $2M or $3M, then the other $197M on the bank. And then another $100M comes and they will invent things. They will start buying milk, I don’t know, for everybody in the class. They will buy it from the brother and the brother will ask for $3 per liter when they actually pay $1. You know, things like that will bring corruption.”
This is what history taught us in other countries, the CEO said, where the oil wealth flowed in and countries had no clue on how to spend it.
“They didn’t have a Sovereign Wealth Fund (SWF), they didn’t have a good plan, they didn’t have good institutions. At that moment the money flows in and everybody is happy because there is a lot of work; everybody will have work, the salaries will go up, everybody will start building a house and everybody will be happy, but there is still $1B in the bank, some will steal some,” Elias cautioned, while referencing African countries and even Columbia that fell prey to this mismanagement.
With this in mind, Elias says that countries need to have good plans in advance of what it is going to do with the money, not for one year, but for years to come.
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