Halt US$20M World Bank loan to Guyana for oil sector

Halt US$20M World Bank loan to Guyana for oil sector – German NGO

Apr 19, 2020 News

– says probe needed into contracts awarded to Exxon’s affiliates

By Kiana Wilburg

A German Non-Governmental Organization (NGO) called Urgewald is appealing to the hierarchy of the World Bank Group to halt further disbursements to Guyana through its US$20M Guyana Petroleum Resource Governance and Management Project.

TT Local Content Expert and Energy Strategist, Anthony Paul

The call for the World Bank to freeze the financial assistance is premised on the fact that two affiliates of ExxonMobil were able to grab up two contracts that deal with the policies and laws Guyana will use to regulate ExxonMobil and other oil companies.
Considering this, Urgewald said that the matter is one which has to be thoroughly investigated as it believes that the World Bank’s rules on conflict of interest are being violated.
The World Bank has a very detailed outlook on what constitutes conflict of interest. In fact, the bank believes that any situation where a person’s independence, objectivity or impartiality are compromised, could be compromised, or may be seen by some as being compromised, denotes conflict of interest and therefore disqualifies that person or company from being awarded a contract, unless of course, that situation is addressed to the satisfaction of the bank.
In the case of consultants, who are hired by a borrowing member of the Bank, the institution specifically states that “Consultants shall not be hired for any assignment that would be in conflict with their prior or current obligations to other clients, or that may place them in a position of being unable to carry out the assignment in the best interests of the Borrower.”
Be that as it may, the World Bank went ahead and gave its blessings for two contractors who had prior obligations to ExxonMobil to be awarded two major projects.

Exxon-affiliated Consultant, Dr. Michael Warner

Expounding on these two cases in a letter of appeal to the Directors of the World Bank Group, Urgewald recalled that it was in April 2019 that the financial institution gave the green light for Guyana to get US$20M to develop its capacity to manage the oil sector. Part of the Bank’s financial assistance targeted the drafting of new policies and laws, including the Local Content Policy and Petroleum Taxation and Fiscal Regulations.
In 2019 as well, the NGO reminded that the coalition administration had announced that an oil consultant, Mr. Michael Warner, was hired to finish the drafting of the new Local Content Policy which would apply to new oil projects’ requirements surrounding the participation of Guyanese labour, services and goods. The organization noted that there was public criticism of the hiring of Mr. Warner, as he is the same contractor who was hired and paid by ExxonMobil to run the oil giant’s Local Content Centre for Development on South Road, Georgetown.
Using reports that would have been produced by Kaieteur News, the Human Rights Organization told the World Bank that the hiring of Warner was further criticized because he has no track record of independently producing a local content policy for any country.
With further reference to Kaieteur News’ articles, Urgewald reported in its letter to the World Bank Directors that the revised Local Content Policy developed by Mr. Warner ignored key recommendations which were intended to improve transparency and give locals the upper hand in the industry.
Urgewald also told the directors that Warner injected into the final policy, a provision which allows for Local Content reports submitted to the government by foreign oil companies to remain confidential, while only a “summary” of those reports would be made public.
Urgewald in its letter said, “Stakeholders have criticized that such confidentiality would hinder the public’s ability to hold the companies, regulators and government to account and would prevent them from being able to analyze either compliance with the law or the degree of local economic contributions.”
The NGO added, “The independent national newspaper, Kaieteur News, reports that the confidentiality provisions were not included in the first two drafts of the policy that were done by Trinidadian Local Content Expert, Anthony Paul. The confidentiality provisions were only added after the ExxonMobil-linked oil consultant, Mr. Warner, was hired to revise the new policy.”
When questioned about the procurement process surrounding the hiring of Mr. Warner, the NGO told Directors that the government responded that it used a limited competitive selection process to expedite the award of the contract consistent with the World Bank’s Procurement Regulations. In addition, an evaluation report was completed and sent to the World Bank for its no-objection.
Urgewald further informed the World Bank Directors that Kaieteur News had since confirmed with the former Business Minister, Dominic Gaskin, that this contract was never advertised. In addition to the clear conflict of interest and resulting policy changes that undermine governance in favour of oil companies, Urgewald said that this contract that was awarded to Warner also raises the important question of why, if Guyana already had a local content expert drafting the new policy, did the World Bank Project fund another contractor under a limited, non-transparent process.
Turning its attention to another questionable contract, Urgewald noted that the law firm Hunton Andrews Kurth was hired for US$1.2 million to draft new petroleum laws for Guyana, covering, inter alia, tax regime, production sharing contracts, and environmental regulations. Urgewald was keen to note, however, that this very law firm has been representing ExxonMobil for some 40 years.
On this premise, the NGO said the hiring of Hunton Andrews Kurth and Mr. Warner for the drafting of new laws involving oil development, clearly violates the Bank’s Procurement Regulations as such, it believes that an investigation is warranted and that further funding under the Guyana project should be halted until the probe has been completed.
Urgewald is a non-profit environmental and human rights organization that is based in Sassenberg, a small town in western Germany. It also runs an office in Berlin. For 25 years, Urgewald has been fighting against environmental destruction and for the rights of people harmed by corporate profit interests. During these 25 years, Urgewald has evolved from a small group of people to a powerful organization.