Crucial capacity issues for oil and gas sector remain unaddressed

Crucial capacity issues for oil and gas sector remain unaddressed – IMF

Aug 25, 2018 News

· Tertiary institutions without strong training programmes on petroleum
· Govt. agencies yet to enhance audit units
· Reforms to public financial management system not completed

By Kiana Wilburg
The curricula of tertiary institutions are virtually without hardcore training programmes for oil and gas. Many ministries and government agencies are without strong audit departments and an augmented staff that is ready to analyze petroleum-funded projects. Reforms to the public financial management system are yet to be completed.
This is essentially the state of Guyana’s capacity-building efforts by the government for the oil sector. Global financial bodies such as the International Monetary Fund (IMF) are saying that more needs to be done to prepare Guyana for an area that is known to be notoriously corrupt.
According to the IMF, there is limited capacity at all levels in the Ministry of Finance and in the line agencies. It said that this is a significant constraint for the possibilities to implement and institutionalize Public Financial Management (PFM) reforms. It said that these reform measures will need to be carefully prioritized and sequenced so as not to overload the limited capacity.
Further to this, the Fund said that the extent and wide-ranging nature of future PFM reforms perhaps require a more coordinated approach to reform implementation. It said that many countries faced with an extensive body of work have formed a dedicated reform team to organize, coordinate, and facilitate the required reforms in many PFM areas.
It said that the reform unit/team will provide oversight, guidance and monitoring to the PFM reform plan and act as a coordinator of the overall PFM reform program. In Guyana’s case, the IMF stated that Guyana needs to adopt such an approach. It said that the country’s Unit should be directed to upgrading the skills of staff in the Ministry of Finance and line agencies by developing a core PFM training program.
As for further capacity building efforts, the Fund said this could and should have been coordinated with local training institutions. In this regard, it said “The Ministry of Finance should explore further the options to cooperate with local training institutions (e.g. recently opened Bertram Collins College of the Public Service; University of Guyana) and other partners to deliver necessary training programs on a continuous basis.”
It added, “Other, cost-effective and efficient solutions, such as developing a partnership arrangement with other countries in the region could be a viable option as well. New capacity-building actions should be designed to channel appropriate training programs through these institutions, and to use their staff to perform training. In this way, training skills could be further built up in those institutions to provide sustainable ongoing training in years to come.”
Given the state of affairs, the International Monetary Fund made several recommendations in areas Guyana needs urgent capacity building.
The Fund said that the country needs to develop capacity to interpret and administer Production Sharing Agreements (PSA). It said that officials should understand thoroughly all the fiscal provisions in these arrangements, including the accounting annex.
It added, “Government needs to establish formal and structured working relationships on responsibilities between agencies with regulatory responsibilities for the petroleum sector. It needs to develop petroleum fiscal regime models and train officials on tax policy, fiscal modeling and revenue forecasting for the sector. They also need to strengthen the fiscal reporting including on natural resource revenue flows and statutory bodies and public corporations, and ensure consistency with international standards (e.g., the IMF general template on natural resource revenue statistics).”
It noted too, that the Government needs to build capacity to undertake long term revenue forecasting from extractive industries.