Ministers’ relatives, friends now applying for oil licences

…allegedly using ‘front companies’

A worrying case of cronyism is currently evolving where relatives, friends and associates of Ministers and senior Government functionaries have been incorporated into companies through complex shareholding arrangements and are applying for Exploration and Production Licences for Oil and Gas in the blocs still available in Guyana’s Exclusive Economic Zone in the Atlantic.

The matter was raised on Wednesday by former President Bharrat Jagdeo when he addressed media operatives at his Church Street office.
According to the Opposition Leader, such a ploy could see middlemen through these front companies with close relations to the coalition A Partnership for National Unity/Alliance For Change (APNU/AFC) Administration raking in tens of millions of US dollars by flipping those licences to international companies since they are unable to raise the required capital for the exploration and development activities required for commercial oil production.
One such company identified in recent times is Totaltec, which is allegedly spearheaded by the brother of the Petroleum Advisor to President David Granger, Dr Jan Mangal.
Jagdeo has called on the Administration to have the available blocs auctioned instead.
He told members of the local media corps “it has been brought to our attention that a number of front companies with key APNU/AFC individuals and Ministers and their families as shareholders have submitted applications to the Ministry of Natural Resources for petroleum Exploration and Production Licences.”
The Opposition Leader said: “There are at least two companies that we know of that have developed complex shareholding structures that have made applications.”
Speaking to the need for the available blocs to be instead auctioned off rather than having preferred companies apply, Jagdeo sought to point out that a premium must be considered.
Jagdeo suggested that the world-class discovery of oil in Guyana could be compared to a ‘gold shout’, and said the moment oil was discovered, “there is a premium now to owning offshore blocs and getting an Exploration or Production licence”.
He was adamant that several of the local companies applying for petroleum licences “have no means whatsoever – who are aligned to Ministers and their families, etc, and some others, cronies – they have no means of finding hundreds of millions of US dollars to do the exploration work.”
As such, he opined that the companies in question “will get these blocs and weeks later, they will sell the blocs without any competitive process being followed”.
Jagdeo suggested too that even some of the foreign companies that have been making applications had “unhealthy contacts with some Ministers and their surrogates”.
The Opposition Leader posited that were these companies to secure licences, there is the possibility of them earning tens of millions of US dollars.
He told members of the media that according to industry experts he has been in communication with, “the big companies will just buy these up (licences)”.
Jagdeo suggested that were President Granger serious about transparency in the sector, he would shut down the application process and instead have the blocs auctioned off.
“The process is not transparent now, they should look at the beneficiaries, the shareholders of these companies, they are very complex now; they are a lot of front people, and they should go to an auction because now this is a valuable resource.”
Jagdeo also reminded that given the discovery of oil, the blocs could now be sold at a premium.
“If you go to an auction, money that the middle men will make will come to the State…so if they auction off these blocs, the companies that will buy it they don’t have to get middle man who will buy it and sell it to them without any tender in a secret process.”
The former President reminded too of what he called the ‘dilly dallying’ on the part of the Administration and the Natural Resources Ministry when it came to putting in place key mechanisms such as the Petroleum Commission, Local Content legislation and the Sovereign Wealth Fund among others.
“I think it suits the Ministry not to have these institutions in place, not to have laws in place, because then the Minister and a few people around him have absolute power to do what they want without any public scrutiny,” Jagdeo posited.