Kaieteur News – Guyana, a nation blessed with abundant natural resources including oil, gold, timber, and bauxite. Since 1989 with the advent of the Economic Recovery Programme (ERP), it has been pursuing a resource extraction model that promised significant revenues and job opportunities, However, despite decades of attracting foreign investments, the country has failed to reap commensurate benefits.
Guyana’s current resource extraction model, characterized by lopsided agreements, limited local content, environmental degradation, and fiscal vulnerability, exposes the nation to foreign plunder with minimal returns for its people. Only through a more equitable and sustainable approach can Guyana break free from the cycle of resource exploitation and realize its full economic potential.
One of the most glaring examples of the flawed resource extraction model is the Production Sharing Agreement (PSA) signed between ExxonMobil, Hess, CNOOC, and the Guyanese government. Critics, including Glenn Lall and the now ruling PPP/C, have rightly pointed out that the PSA is lopsided, heavily favoring the foreign companies. Under the current terms, the lion’s share of earnings flows to these multinational corporations, leaving Guyana with crumbs.
This skewed distribution of wealth is worsened by contract provisions that allow the oil companies to recover costs before profit-sharing begins. As a result, despite Guyana being an oil-producing nation for the past four years and now bragging about being fastest growing economy in the world, its citizens see little benefit as the majority of revenues are siphoned off by the oil companies.
The current resource extraction model places insufficient emphasis on local content and job creation. And this is despite the passage of local content legislation. In any event, local content is limited only to the oil and gas sector and not to all other extractive sectors as was promised. Local content legislation came too late-after the spoils of the industry had already been appropriated by large foreign companies.
The reason for the low employment opportunities in the oil and gas sector is because Guyana lacks the skills to work directly on the oil rigs. In any event, there are far too many foreign workers employed by the oil companies, relegating locals to low-level jobs. foreign companies often bring in their own skilled workforce, limiting the positive impact on Guyanese employment.
The resource extraction model in Guyana also raises serious environmental concerns. Insufficient regulation and oversight have allowed foreign companies to exploit natural resources with little regard for the long-term ecological consequences. Deforestation, water pollution, and habitat destruction are all too common in areas where extractive operations take place. Now, there is a race to rush-through consultations of the Environmental Impact Assessments being undertaken for new field development plans.
The current extractive resource model prioritizes short-term economic gains over the preservation of Guyana’s unique ecosystems and biodiversity. Guyana does not have a written depletion policy, a grave oversight or act of negligence.
The “resource curse” phenomenon, where countries rich in natural resources often struggle with economic instability and corruption, is a real threat to Guyana under its current resource extraction model. The heavy reliance on revenue from extractive industries makes the economy vulnerable to global commodity price fluctuations. This volatility can lead to fiscal crises and undermine the nation’s long-term economic stability.
The influx of petrodollars can fuel corruption and rent-seeking behaviour among the political elite, diverting resources away from the hands of the people into the rich contractors.
To address these pressing issues and mitigate the risk of foreign plunder, Guyana must consider a comprehensive reform of its resource extraction model. This reform should include renegotiating contracts. The government should actively pursue fair and equitable Production Sharing Agreements that prioritize the interests of the nation and its people.
Local content legislation should be made more stringent and cover all extractive sectors not simply oil. This would ensure that foreign companies do not gobble up all the major contracts for new investments.
The country’s environmental laws need upgrading if it to hold foreign companies accountable for any violations. At present, Guyana’s environmental laws are weak and outdated and need to be revamped to include the provision of environmental levies.
But beyond these reforms, Guyanese must wake-up to the reality that a new model of resource extraction is needed, one which may have to involve keeping the resources where they are until better deals are secured and more sustainable extraction policies are implemented.
Unless this happens, Guyanese will wake–up one day and find that their resources have disappeared and yet they are still poor and powerless. That day may be soon at the rate things are going.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)
I will eat a piece of Exxon Christmas Cake with your ingredients inside.
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