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US$20M World Bank Loan to build tough legislative architecture for oil sector
Finance Minister, Winston Jordan
The government would soon be able to access a US$20M loan from the World Bank. According to Finance Minister, Winston Jordan, part of that money would be used to build a tough legislative architecture for the nation’s oil sector.
The Minister made this known during a press conference that was held last week.
The economist said that at the moment, there is no direct legislation for the oil sector, with the exception of those that already exist. He said that Guyana lacks the people who would be able to competently draft the pieces of legislation needed for the sector. With part of the World Bank loan, he said that the government would be able to do this.
For the time being, Guyana is making moves to draft several pieces of laws and policies which speak to Local Content, the establishment of a Sovereign Wealth Fund and the creation of the Petroleum Commission.
LOCAL CONTENT POLICY
The completion of the Local Content Policy is now up to Business Minister, Dominic Gaskin. This crucial document will provide guidance on the employment of locals as well as the use of goods and services provided by indigenous companies.
That said, Guyana’s draft Local Content Policy has been criticized in recent months for lacking provisions, which would safeguard against exploitation by companies. The draft is still receiving “finishing touches” according to Natural Resources Minister, Raphael Trotman.
The draft however speaks nothing of how to avoid procurement fraud, conflict of interest and favouritism, among other crucial areas.
Instead, the Local Content Policy framework seeks to address, the suite of opportunities that may arise and the approaches to be taken in selecting and developing opportunities related to enhancing the capabilities of Guyanese nationals and businesses.
It also describes what will be done to ensure that the activities in the petroleum sector are conducted in a manner that transparently secures the maximum benefit for the people of Guyana, while recognizing the limitations of the country; and holding all actors accountable to the present and future generations of Guyanese who are the owners of the nation’s petroleum resources.
SOVEREIGN WEALTH FUND
The draft legislation which will pave the way for the establishment for the Sovereign Wealth Fund (SWF) is also receiving finishing touches.
Finance Minister, Winston Jordan, has announced, however, that the draft document will be the subject of several rounds of consultations before it gets to Parliament by year end.
In the interim, the International Monetary Fund (IMF) has already provided advice to the government on the different areas in which they should improve on in the draft document. One of the areas it commented on in this regard speaks to the need for clearer reporting requirements when the SWF is used by officials.
PETROLEUM COMMISSION
The Petroleum Commission is still stuck in a sub-committee of the National Assembly. It has been the subject of much consultation and criticized heavily for its many flaws.
One of the most disturbing concerns regarding the Bill pertains to the uncapped authority given to the Natural Resources Minister.
Not only will the Minister have the power to select the members of the Petroleum Commission but he can also select and appoint the members of the Board along with its secretary. In fact, the Minister can even disrupt the work of the Commission as he pleases.
Minister of Natural Resources, Raphael Trotman, has already indicated that he intends to have such powers in the Bill diluted.
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