Former Minister of Energy and Energy Affairs in Trinidad and Tobago, Kevin Ramnarine, believes Guyana would do well to guard against any borrowing on its projected income from oil since these revenues are merely estimates, being made in an extremely volatile market and industry.
Ramnarine, speaking at a press briefing held at the Marriott Hotel on the sidelines of the Guyana Petroleum Exhibition and Summit (GIPEX), told the media, “Speaking as a former member of government and somebody who is a great believer in fiscal prudence, I think Guyana would be best advised to wait until the revenues start to flow (first).”
He justified this position referencing countries that would have – based on projections -contracted large loans and when the production levels did not materialize the national economic situation was adversely affected.
Ramnarine said while there is need for some development now – such as supporting infrastructure likes roads to the shore base – waiting until 2020 for first oil would be the better option on larger projects. “I would really wait for the monies to start to flow,” he suggested.
One reason offered; with a two year gestation period ahead of first oil in 2020, contracting large loans would still not be feasible since larger scale projects usually incur longer cycles from concept to completion.
According to Ramnarine, when it comes to remedying deficiencies in systems that are critical to the monitoring and oversight of the industry for example, the Guyana government would do good to consider approaching multilaterals such as the World Bank.
The former government official said it is with this in mind – and learning the lessons and avoiding the pitfalls of countries such as Trinidad and Tobago – he discourages any upfront borrowing from oil exploration countries in order to begin repairing its infrastructure and other badly needed services.
Projections are simply projections in a volatile and largely unpredictable industry and market which have left several countries victims of upfront borrowing, Ramnarine stressed.