Government seeks to reduce fears of misuse and mismanagement of oil wealth

Jul 26, 2016 News

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By Abena Rockcliffe-Campbell
Guyana still ranks 119 out of 168 countries on the corruption index. The higher the number, the more

corrupt the country is deemed to be. The coalition government indicates that it is well aware that it has its work cut out in its effort to reduce the perception of corruption in Guyana.
There is worry that Guyana has been deemed corrupt even before it has been blessed with the wealth that comes with oil production. Guyana also has a problem with transparency. However, most cases surrounding the lack of transparency existed under the People’s Progressive Party/ Civic government.
Minister of Natural Resources, Raphael Trotman and Minister of Finance, Winston Jordan, recently returned from Uganda. The two visited that country to observe the steps that Uganda has been able to make in preparation for oil production as well as the wealth to come. The Ministers also got a firsthand look at many of Uganda’s policies.
Last year, the Ugandan Parliament passed the Public Finance Management Act, which details how oil revenues should be used. Included is the stipulation that oil money must be invested in infrastructure and to boost agriculture, rather than used for recurrent expenditure.
The act creates a petroleum fund where oil revenues will be saved. It includes provisions for the management of funds and a mechanism for sharing a small portion of royalties with local governments in the oil-producing region. It also creates a sovereign wealth fund – the petroleum revenue investment reserve – to help invest the oil money.
The government has instituted the National Oil Company to manage Uganda’s commercial interests within the oil and gas industry, and new rules bar international oil companies from appointing expatriates to positions that qualified Ugandans could occupy.
With the sector expected to create hundreds of thousands of jobs, Ugandans are taking courses to understand the industry’s dynamics.
But there are signs of trouble, too. And in this regard, there is a hope that Guyana would not be patterning too much off Uganda.
Uganda’s government oil agreements are shrouded in secrecy, keeping millions of Ugandans in the dark about events in the sector. There have been petitions urging the government to make the extractives sector more transparent.
Ugandans want government to sign up to the Extractive Industries Transparency Initiative (EITI), a global accountability platform that commits oil and mining companies to publishing what they have paid governments. Governments, in turn, publish how much they have received from oil companies.
Even as Trotman opined that perceptions of corruption are sometimes high even when little corruption is taking place, he noted that Guyana is working to ensure that it doesn’t find itself in a similar situation to Uganda in that regard.
Trotman said, “You will find that in developing countries there is this ongoing tension between resources management and people’s expectation.”
He said that in many developing countries you hear complaints about misuse of money and suspicions that there is corruption.
The Minister said that allegations of lack of corruption that he heard in Uganda is “nothing we haven’t heard or would not hear elsewhere, because in many parts of the developing world people feel that money from oil or gold or timber have been squandered, so I think people in Uganda are a little cautious.
Trotman also pointed to the fact that Uganda discovered oil in 2006 and 10 year later actually oil pumping is still to begin.
“They are still working out issues of a pipeline that has to go through Tanzania and they are looking to build a refinery. So while those two things are taking a longer time to come into being the people are naturally becoming anxious. Anxiety breeds suspicions and distrust, said Trotman.
The Minister said that while he understands that citizens may always be suspicious, the coalition government wants to do everything in its power to minimize perceptions of corruption.
Trotman said that the perception of corruption is one of the main reasons his Ministry is pushing so hard to have Guyana become a member of Extractive Industries Transparency Initiative (EITI). EITI is an international organization which maintains a standard, assessing the levels of transparency regarding countries’ oil, gas and mineral resources.
Trotman said that he is looking to get Guyana to become a member of this organization as soon as possible because to “take care” of certain perceptions and expectations at an early stage.
“We will put this in place even before the revenue comes so that we can manage expectations by providing information and so forth,” said Trotman.
He said too that he recently met with consultants from the World Bank in this regard. “We made tremendous progress and we are getting ready for a November submission of application for membership (of EITI).”
Trotman also noted that government is looking at another initiative called the Open Government Partnership.
He said that these initiatives along with the establishment of the Sovereign Wealth Fund should put the hearts of Guyanese at ease.

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