With over US$40 billion in sanctioned projects for the Stabroek Block, Guyana’s Vice President, Dr. Bharrat Jagdeo has assured that the pace of approval for these investments is not outstripping the country’s monitoring capabilities, nor is it overheating the economy.
The chief policy maker for the industry in Guyana explained that expenses for the ExxonMobil-operated Stabroek Block are being diligently reviewed by regulators with no set time frame on when these assessments can be done or when certain costs can be contested.
“…so that means, even if we don’t have the capacity today, and we build that capacity three years down the line, then the expenses will still be able to be examined. There is no time limit for remedial action and for recovery for expenses that may have not gone towards cost recovery under the [Stabroek Block] PSA [Production Sharing Agreement]…”
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Currently, the government is finalising the audits for Exxon’s costs spanning 1999 to 2020, and totalling approximately US$8.9 billion. It is still to review expenses incurred for 2021 and 2022.
Jagdeo said the administration could have taken a swift approach by having all the audits for Exxon’s bills awarded to foreign entities. Dr. Jagdeo said however that the government is keen on having Guyanese part of the process with the hopes that they would eventually handle those matters singlehandedly in the future.
With respect to concerns that the pace of investments could overheat the economy, the Vice President said this is not the case.
“…the sector operates in an enclavic way. If that investment was taking place in this economy like very integrated, then US$40 billion in an economy… that would have triggered massive overheating etc.,” he said.
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Dr. Jagdeo further explained that only certain elements of the US$40B flow into the economy since most of the services needed to bring Exxon’s projects into operation are highly specialised and not available here.
Be that as it may, the oil sector has had an unprecedented effect on other sectors, triggering shortages in labour and building materials for the construction sector. Jagdeo said the situation is one that government is monitoring carefully along with the effects of the Dutch disease.
For the time being, he said one of the most debilitating symptoms, being currency appreciation, is not here. However, the government, he said, will remain vigilant as the phenomenon is known to have a destabilising effect on the agriculture and manufacturing industries.
