Guyana: Why Has the Economy Been In Shackles Since Colonial Times – By Ralph Ramkarran

 CONVERSATION TREE BLOG –   – 

Guyana’s is and has always been a primary producer. During its years of Independence, although there was some economic growth, Guyana was unable to significantly diversify its economy by, firstly, adding value to what it produced and, secondly, advancing the process of industrialisation.

Apart from political instability and consequential factors, the absence of an adequate and cheap supply of electricity was the major obstacle inhibiting such development. For a decade and a half beginning in 1957, Guyana saw the construction of a bauxite smelter as a way of triggering and, thereafter, advancing industrial development. Both parties struggled mightily to access foreign aid for projects to increase the supply of electricity. From Tiger Hill to Mazaruni, both failed.     

These failures have kept Guyana poor and aided its consignment to the second poorest country in this hemisphere. Guyana again tried as it launched the Amaila Falls Hydropower Project (AFHP) in 2009. While on this occasion financing was negotiated and independent international consultants approved the project, the internal politics were not aligned. The requirement by the contractor for parliamentary approval for the project failed as the Opposition, then holding the majority, refused to support it in 2013.

In normal circumstances it would have been difficult to restore AFHP. The Government’s parliamentary majority is now slim, the aid package no longer exists and the cost would have increased. Opposition, for no known reason, except environmental despoilation, remains. But in the new Guyana, as an oil producer, all things have become possible.

According to the now revised Low Carbon Development Strategy 2030, Guyana’s demand for electricity will increase threefold by 2027. In order to satisfy this demand, the Government proposes a gas to power facility and a revival of AFHP. A vast expansion of solar power and small hydropower facilities for the interior region is proposed. A revival of the Tumatumari hydropower facility, which some African Guyanese entrepreneurs and engineers sought to do but could not get funding, should be considered. Other sources of power such as wind and biomass are on the agenda. But gas to shore and hydro can be constructed and deployed rapidly, as the LCDS suggests, to expand Guyana’s supply of electricity at a moderate cost for consumers. If this happens, Guyana will finally be able to produce enough electricity at a price that will make investment in industrial development more feasible. Guyana can finally be able to alter its trajectory as a primary producer to develop its great agro-industrial potential.

But, like everything else, there are obstacles. The APNU+AFC has tabled a motion in the National Assembly “to halt the Government’s estimated US$900 million Wales Gas to Shore Project (GSP) in order for there to be comprehensive studies by independent consultants and a parliamentary review.” (SN 2021-10-30). This motion, on the surface, appears to be well-founded. It is based on the absence of in-depth feasibility studies, the potential dangers of an underwater gas pipeline and the GSP’s location at Wales and calls for the examination of the parliamentary committee on natural resources and thereafter, for parliamentary support.

But there are several problems. Just as the APNU+AFC points to the failure of the Skeldon Project, on which the Government relied on Tate & Lyle for advice throughout, the Government can point to APNU+AFC’s failure to support AFHP even though an internationally reputable consultant, Norconsult, agreed to by APNU+AFC, supported the AFHP, with suggestions for minor adjustments. The Government saw APNU+AFC’s attitude at that time as unprincipled opposition to any PPP project. AFHP was not the only one that was ditched when the APNU+AFC assumed office in 2015. So was India’s offer of a world class specialty hospital. It will argue that APNU+AFC will never accept any project by the Government that will improve Guyana and benefit Guyanese.

Like the AFHP, the Opposition is riding a wave of civil society objection. It is not clear whether civil society spokespersons would support GSP, if safety and environmental concerns are met, or if some oppose GSP under any circumstances. But although there have been a few minor accidents, submarine pipelines are widely used in offshore oil and gas exploitation. “Submarine pipeline is the fastest, safest and most economical and reliable means of transporting gas continuously.” (https://www.sciencedirect.com/topics/engineering/submarine-pipelines).

The Nordstream 2 gas pipeline between Russia and Germany was the recent subject of controversy in relation to environmental concerns. But political concerns were also an issue in the US. President did not oppose the pipeline, much to the chagrin of opponents of Russia. Since 2011 Russia has delivered gas on a 1,200 kilometre journey through 200,000 pipes that lay on the seabed, each weighing 24 metric tons, to Germany, through the Nordstream 1 pipeline, without mishap. Of course, extensive safety measures and monitoring have been in place.

Guyana cannot allow this opportunity to bypass us again, firstly, for a cheap and abundant supply of energy, without which our economy will never move beyond that of a primary producer and, secondly, for the eventual elimination of the use of heavy fuel and diesel oil to produce electricity.

SOURCE: http://conversationtree.gy/why-guyanas-economy-been-in-shackles-since-colonial-times/  — Leave a comment

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Comments

  • Winston  On 11/02/2021 at 6:05 am

    That is the way politics is played out no matter who the opposition is.

  • brandli62  On 11/02/2021 at 1:39 pm

    I largely support the analysis of Ralph Ramkarran regarding the safety of underwater gas pipelines. As mentioned, North Stream 1 is a good example to cite. That pipeline is in operation for years without any problems encountered to date.

    In general, Guyana would be foolish not to commercialise its gas resources that are a byproduct of the offshore oil production. A little known fact in the climate change debate is that a rapid replacement of coal by natural gas for electric power production would could the CO2 emissions by 50%. If Guyana develops its capacities to liquify natural gas, I could become an important liquified natural gas (LNG) exporter. The demand for LNG will increase rapidly in the coming years. Currently, there is a world-wide shortage of LNG and thing will not get better any time soon.

    Finally, a small correction, regarding the environmental objections in Germany against North Stream 2, the sister pipeline. The objections raised by the Green Party were primarily along the lines that Germany does not need a further source of gas in the age of climate change. It should rather invest into renewable energy sources.

  • wally n  On 11/02/2021 at 3:12 pm

    Like you, his suggestion were always bang on, why they were not implemented, politics?
    My problem is with weather changers is, powerful outside forces DEMAND CHANGES not concerned with the consequences,except when it comes to China,India..This massive change over they are forcing does not give small countries a reasonable transition period, my opinion, take your time Guyana, don’t
    bend to the pressure, do what you can for your backyard, remember they never cared before, you believe them now?

  • brandli62  On 11/03/2021 at 5:35 am

    Wally, I fully agree that Guyana does not need to respond to bullying. The country is definitely not responsible for climate warming. In fact, by largely preserving its rain forests, it has made a huge contribution to the world. It should also be allow to exploit its newly discovered oil and gas reserves. They will be crucial during the transition to a largely carbon-free economy. As mentioned above, a transition from burning coal and heavy oil to natural gas will already lead to a 50% reduction in CO2 output. Guyana should therefore move from burning oil to gas-powered electricity production. The should be supplemented by solar panels on every home, public and commercial building. How about implementing a law requiring solar panel on new building as a rule? Exceptions should only be allowed for historic building. In addition, the nation needs to move from dumping waste and garbage in land fills (as they become a source for methane emission and can contaminate the ground water) to burning waste in incinerators. The energy gained from burning waste could be used for electric power production during the night, when solar energy production is down. Overall, there is lots that can be done in a small nation with existing technologies. It just takes good leadership.

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