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Govt. still adrift on oil and gas – Jagdeo

Nov 08, 2018 News

Opposition Leader, Bharrat Jagdeo has said that there continues to be an absence of effective policy direction from Government in the oil and gas sector.
“We are drifting now in this country. We don’t know who is in charge. We just seem to be swaying in the wind. I don’t know what is happening in the oil and gas sector.
“The president personally took it over. We can get no clarity on any major matter,” Jagdeo told the media yesterday.
Instead of the important issues in oil and gas being discussed at the national level, Jagdeo said that the Government has sidetracked the media and the rest of the country with issues surrounding the management of the Berbice River Bridge.
He addressed the establishment of the Natural Resources Fund, which is one element of a management framework for the sector.
Jagdeo reminded of his party’s position that there should be no Government involvement in the management of the funds. However, Government’s intention is to have the fund managed via the Central Bank with critical appointments for the funds managerial structure being undertaken by the Minister of Finance.
Government’s Green Paper on the fund states that the Ministry of Finance will manage requested withdrawal from the fund in the annual budget proposal.
The Ministry will also be responsible for calculating the fiscally sustainable amount, drafting the investment mandate, and entering into the operational agreement with the Bank of Guyana.
Additionally, the Green Paper highlights that the Ministry of Finance will appoint a five-member Macroeconomic Committee, which will determine the economically sustainable amount for the fund.
Further, the intention is to have the Minister also appoint a seven-member Sovereign Investment Committee, which would be responsible for advising the Minister about the fund’s investment mandate.
“The fund is being dominated by the Government; therefore we are opposed to that. We want an independently managed Sovereign Wealth Fund that is insulated,” Jagdeo noted.
He stated that the fund should also include simple fiscal rule where everyone understands it and how to get resources from the fund.
He said oftentimes, such funds cater for excess reserve, but in Guyana’s case, the government is running a very low reserve that is less than three months of imports.
“We may have to spend a couple of years using all the money we receive from ExxonMobil just to build up back our reserve,” Jagdeo warned.
Government has also been criticised for not implementing the Petroleum Commission Bill and finalizing a local content framework.
All of this as Guyana prepares for first commercial oil production by early 2020.
The Government said it will be ready in time and has placed much confidence in the recently established Department of Energy in the Ministry of Presidency which will have direct oversight from President David Granger.

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