Guyana has very narrow window to get right what other countries struggled with for decades – IDB

With an estimated nine billion barrels of oil, equivalent resources and a projected fiscal windfall of US$49 billion in revenues over the next few decades, Guyana is poised to be a significant player in regional and international energy markets. However, the direction and magnitude of transformations that could come from the wealth Guyana holds will depend on a combination of cohesive policies and strong institutions to ensure benefit transfer to all segments of Guyanese society, for this generation and the next. Making this assertion was the Inter-American Development Bank (IDB).

In one of its latest reports which focused on the challenges facing Guyana and the development of its resources, the IDB said that as a new oil-producing country in a turbulent global energy market, navigating the challenges and risks associated with overreliance on the petroleum sector should be designed as part of the country’s long-term development strategies.

It noted that the recent price swings for crude oil on the market, triggered by both traditional sources of instability (the interplay among producers and under-investment), and the new phenomena such as the novel coronavirus and the proliferation of renewable energy technologies, will gradually displace the reliance on fossil fuels. Taking this into consideration, the IDB said that Guyana “has a very narrow window to get what other countries in the past have struggled to get right over decades.”

The financial institution said it is imperative that authorities embrace the lessons learnt by countries that have had successful hydrocarbon sectors and avoid the mistakes of those that have failed to create long-lasting value.

With strong political will, the bank said, successful countries have overcome challenges and established models of good governance within their extractive sectors. In this regard, it said that Guyana may consider several actions that can improve transparency and the realization of tangible outcomes from the development of its resources.

The IDB said for success, Guyana must have a defined national integrated plan for its oil and gas sector with clearly established Key Performance Indicators (KPIs) and timelines for achievement, supported by operational and funding plans to support implementation. It said these plans will be used as the driver of the sector’s development. Further to this, the financial institution said that transparently delineating the roles and responsibilities among and within government entities would also put Guyana at an advantage in properly managing the sector and avoiding mistakes made by others.

It said that the clear assignment of goals, roles and responsibilities has been identified and considered as one of the most valuable lessons learned by various countries.