GUYANA: President Ali’s 55th Independence Address – “Oil must benefit all communities”

Oil benefits must pass on to all sectors of society

President, Dr. Mohamed Irfaan Ali, delivers the 55th Independence Anniversary address.

May 26, 2021 – Kaieteur News – Guyana today observes its 55th Anniversary as an independent nation, and with its newfound oil wealth, is on the cusp of unprecedented economic prosperity. To this end, Head of State, Dr. Mohamed Irfaan Ali, has adopted the position that, “we cannot be a nation that produces oil and gas, earning considerable sums from it, without passing on the benefits to all sectors of our society.” As such, the Administration is exploring ways to begin spending some of Guyana’s earnings from the sale of its oil.     

He gave the pronouncement last evening at the annual Flag Raising observances at Kingston, Georgetown, in the vicinity of the Umana Yana, with the Appeal Court, the Guyana Marine Turtle Monument, Pegasus and Marriott International Hotels serving as a backdrop.

Addressing those in attendance for the scaled down version of the flag raising activities, in keeping with ‘some level’ of COVID-19 restrictions, Dr. Ali used the occasion to disclose that his Administration, since taking office, has been examining the utilisation of Guyana’s earnings from its oil sector.

The country has so far US$327M accumulated in the US Federal Reserve Bank in New York, accounting for earnings from the sale of Guyana’s share of oil in the Stabroek Block, along with royalties paid since production began in December 2019.

That account, a type of sovereign wealth fund, is named the Natural Resources Fund, and is governed by the Natural Resources Fund Act, a piece of legislation passed under the David Granger presidency and criticised by the Dr. Ali administration as inadequate and to be reformed.

Qualifying his announcement with regards spending the oil earnings, Dr. Ali said, the cost of electricity must be reduced for both businesses and household consumption, “therefore, [the] Government is carefully considering mechanisms by which the cost of energy can be reduced across our society by utilising an appropriate percentage of our national earnings from oil and gas to do so.”

The Head of State said, “These mechanisms will be presented to the Nation through the appropriate bodies for endorsement.”
He was adamant that, “the bottom line is that domestic consumers must be given relief and businesses should be rendered more competitive.”

According to President Ali, “our financial resources must be utilised to improve the quality of life for all our communities.”

He had earlier lamented that a number of sectors in the country were adversely affected by the high cost of energy, which has had its own concomitant effects on the cost of doing business, and earning foreign exchange for the country generally.

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Comments

  • brandli62  On 05/27/2021 at 10:25 am

    There is no question that the Guyanese people should benefit from the oil revenues.

    My key issue is whether Guyana follows the path of Norway by establishing a highly successful, well-managed and highly respected sovereign wealth fund, which is immune to political interference, or whether it decides to take the path of Nauru and its Phosphate Royalties Trust, which was mismanaged by politicians. Heavy spending from the trust fund, including some wasteful foreign investment activities and corruption essentially bankrupted the fund. Keep in mind that in the years after independence in 1968, Nauru possessed the highest GDP per capita in the world due to its rich phosphate deposits. Nauru squandered its phosphate wealth and was left with nothing after the resources were depleted. According to the International Monetary Fund, Nauru ranks 112th by GDP (PPP) per capita in 2021. Guyana has moved up to 59th place.

    The Kazakstan model mentioned recently by President Ali would leave all control to the President and the executive. Hence, it will be subject to political interference. Does anybody seriously believe that politicians are good asset managers, irrespective of their political background? Suffice to say that international experts never mention Kazakhstan as model of transparent oil wealth management.

    Every Guyanese, who cares about his/her children and their long-term future, and who happens to be fully informed, would opt for the Norwegian over the Kazakhstan or Nauru sovereign wealth fund models. Right?!

    Here some background information:

    Norwegian Oil Fund (Government Pension Fund of Norway)
    https://en.wikipedia.org/wiki/Government_Pension_Fund_of_Norway

    Nauru Phosphate Royalties Trust
    https://en.wikipedia.org/wiki/Nauru_Phosphate_Royalties_Trust

    Economy of Nauru
    https://en.wikipedia.org/wiki/Economy_of_Nauru

  • wally n  On 05/27/2021 at 12:18 pm

    It seems you are leaning towards Independent Oversight. I believe the Government would only buy in, if the Committee signs an NDA and the Government maintains final decision.
    There are political benefits if the Government accepts advice/input from the committee.decisions will not be totally beneficial to groups, but to the population as a whole, even though the favorite group always wins out.
    The more I read about the “Wealth Funds” the more it appears that Guyana might have to create one of it’s own,so many differences, expected wealth, cultural, population, location..
    With regards to the Committee, (apart from you ), I have no idea where Guyana will find such a group responsible with so much high expectations.
    OK I know somewhere out there lies a long list…..

  • Dennis Albert  On 05/28/2021 at 1:32 pm

    How did Oman become a country rife with unemployment?
    https://oilprice.com/Latest-Energy-News/World-News/People-Protest-Over-Lack-Of-Jobs-In-Gulf-Oil-Producer-Oman.html

    What can the politicians learn from this?

  • brandli62  On 05/28/2021 at 3:16 pm

    I visited Oman in 2019, just a few weeks before the legendary Sultan Qaboos passed away. It’s a stunningly beautiful country. I also got to final meet an old friend of mine, now a professor of chemistry, whom I had not seen in 35 years. During my stay, I also got good insight into local issues.

    Already back then, Oman was starting to have problems with its economy. Oil reserves were running out and the country had accumulated debt. During his almost 50 years of rule, Sultan Qaboos had used the oil revenues to transform the country from a medieval society with essential no schools and infrastructure to a modern 21th century nation. Women are all well educated and occupy positions at all levels of the economy. The Sultna had however failed to put sufficient money aside for rainy days once the oil reserves become depleted. The country also did not manage to diversify its economy sufficiently. Tourism was one of the other pillars of its economy, but this was hard hit by the pandemic.

    For me, it was stunning to see that a country, which is baking in sun, does hardly have solar panels to generate electricity. I told my friend, they should use solar energy, which will allow more oil exports.

    In summary, there are three lessons from Oman for Guyanese politicians:

    1) Keep your economy diversified, even if oil tries to dominate everything.

    2) Press ahead with the introduction of alternative energy as this will allow you to export more gas and oil.

    3) Make sure that you establish a well-managed and well-alimented sovereign wealth fund in preparation for the post-oil era.

    That’s my take on your question, Dennis.

    • Dennis Albert  On 05/29/2021 at 2:51 pm

      Thanks. Should we also contemplate population growth? There are more than 800,000 persons in Guyana, even more.

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