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FM
Former Member

2022 marks pivotal year in Guyana’s transformation as landmark projects set to roll out

https://oilnow.gy/wp-content/uploads/2022/01/wrtretretretretretretretet-986x580-1.pngA section of Guyana's capital city, Georgetown.

The Guyana government is sparing no expense to facilitate the transformation of the country’s infrastructure with billions in funding being set aside this year for major development projects in the oil producing South American nation.

The government said last week it is committed to improving international, hemispheric and regional connectivity; creating, re-establishing and improving communication linkages between major urban, rural, hinterland and inland centres as well as to improve trade and competitiveness.

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And in that regard, some GY$76.7 billion has been allocated for roads and bridges, of which GY$49.2 billion will be spent on roads and GY$27.5 billion on bridges respectively, Senior Minister in the Office of the President with responsibility for Finance Dr. Ashni Singh announced last Wednesday.

For roads, the major allocations include: GY$8.3 billion for the rehabilitation of the Corentyne Main Road from Palmyra to Crabwood Creek; GY$6 billion for the construction of the Linden-Mabura Hill Road; GY$3.4 billion for hinterland roads; GY$2.6 billion for the rehabilitation of the entire Soesdyke-Linden Highway; GY$2.3 billion for the East Bank-East Coast Demerara Road Linkage  between Ogle and Eccles; GY$1.1 billion to complete the Sheriff Street–Mandela Road Network and Expansion Project.

Some GY$15.2 billion has also been allocated for the construction and rehabilitation of additional urban and community roads.

To tackle the major traffic congestion on Guyana’s East Bank Demerara corridor, the government has already constructed and operationalised a 3.7 km inter-community road link between Mocha Arcadia and Diamond.

And by the first quarter of 2022, a new four-lane highway linking Mandela Avenue to Haags Bosch will be completed to ease the daily traffic chaos experienced there.

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Dr. Singh in his presentation outlined that construction of the four-lane Ogle to Haags Bosch road will also commence shortly.

Some GY$2.1 billion will also be spent this year to widen and pave the East Bank Highway from Grove to Timehri while preparatory works for the widening of the East Coast highway from Annandale to Mahaica, the upgrade of the railway embankment from Sheriff Street to Orange Nassau, and the construction of the new four-lane superhighway from Schoonord to Parika have commenced.

With respect to the country’s bridge infrastructure, some GY$21.1 billion was allocated to advance construction of the new, fixed four-lane high span Demerara River Bridge with GY$946 million budgeted to repair and maintain the aged existing floating bridge.

Dr. Singh announced as well that some GY$4.1 billion was allocated for the re-construction of several bridges along the Kurupukari to Lethem corridor to support the phased construction of the critical Linden to Lethem highway.

And further, some GY$173.9 million was budgeted for the construction, rehabilitation and maintenance of main bridges in areas including Garden of Eden, Chateau Margot, Beterverwagting, and Cemetery Road.

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Added to that, the government has also set aside some GY$3.3 billion to finance the improvement and enhancement of the aesthetics of the environment across major urban areas in the country, especially the capital city Georgetown.

That programme will see a number of restoration projects and programmes being undertaken.

Exchange rate: US$1 = GY$207.98

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Guyana oil revenue to more than triple this year

Authorities in Guyana have projected that the country will receive close to US$1 billion in oil revenue this year, representing more than three times what it has earned per annum to date from the Liza Phase 1 Development.

During his reading of Guyana’s 2022 national budget on Wednesday, Senior Minister in the Office of the President with responsibility for Finance Dr. Ashni Singh said, “It is estimated that deposits into the [Natural Resource Fund] NRF for 2022 will total US$957.6 million, comprising some US$857.1 million earned from the government lifts of profit oil, and an additional US$100.5 million from royalties.”

For Guyana, this level of revenue from any sector is a gamechanger. To put that into perspective, when Dr. Singh proposed the 2021 budget about this time last year, he announced that it would cost the equivalent of US$1.8 billion.

The projection is a ramp-up from revenues received from the production of oil in the years prior. Since production began in December 2019, and up to the end of 2021, the Fund received US$607.6 million.

That’s US$185.4 million from government’s share of profit oil and US$12.9 million from royalties in 2020; and in 2021, US$357.2 million from Government’s share of profit oil, and US$52 million from royalties.

The increase in projected revenues for 2022 is due to the start-up of the Liza Phase 2 Development, which is expected this quarter.

“With two FPSO vessels expected to be in operation this year, it is anticipated that there will be 94 lifts from the Stabroek Block, 13 of which will be government lifts,” Dr. Singh told Guyana’s Parliament. In comparison, the official related that that period saw 69 lifts being exported from Guyana, of which 9 were for the government.

The Liza Phase 1 project, already in operation, was built with a nameplate capacity of 120,000 barrels per day and averaged just a few thousand barrels short of that in 2021. With the addition of Phase 2, the government projects a total average production rate of 257,000 barrels per day in 2022. Notably, the Phase 2 nameplate is 220,000 barrels per day.

Currently, the NRF holds around US$607 million, some of which will be withdrawn for the first time to partly finance the budget.

“Budget 2022 is the first budget ever to benefit from withdrawals from the NRF, following the historic passage of the NRF Act last December…” Dr. Singh said.

“Pursuant to the provisions to the newly enhanced legal framework set out in the new NRF Act, Budget 2022 projects a withdrawal from the NRF and transfer to the Consolidated Fund of [GYD]$126.7 billion,” he said.

While it has received some criticism for the decision to withdraw this amount, Guyana has been relying on debt for years to finance its budget, and the new government insists that the practice cannot continue to this extent.

The 2022 budget is the largest ever in the country’s history, in terms of expenditure. While the 2021 budget was announced at about US$1.8 billion, the 2022 budget is a little over US$2.6 billion. Even without accounting for the oil revenues, this year’s budget would have been bigger than the last.

The agenda is packed with large developmental projects to respond to modernisation programmes brought on, in large part, by the country’s oil and gas sector. The President, Dr. Mohamed Irfaan Ali, told Guyanese in a virtual address on Tuesday that oil and gas is the key to Guyana’s transformation.

FM

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