Our leaders still to put 30 safeguards in place to protect Guyana’s $$$

Dec 20, 2020 News

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Today’s the one year anniversary for oil…

Kaieteur News – From a simplistic view, it may be a major achievement. One year since oil production started.
However, it could be far from the truth as the reality is that Guyana has been operating without even half of the fundamentals for the efficient governance of an oil and gas industry.
Even before production began, the country benefitted from lessons shared by the World Bank, the International Monetary Fund (IMF), the United Nations Development Programme (UNDP), Chatham House, the Natural Resource Governance Institute (NRGI), the Inter-American Development Bank (IDB) and a slew of others.
These organizations handed to Guyana, critical recommendations on how to gear up to handle the influx of revenue from the looming oil sector along with prudent advice to help mitigate significant value loss and corruption safeguards.
But one year later, key pieces of advice given have not been acted upon. These include:
1. A review of the Local Content Policy 2020 with the implementation of accompanying legislation.
2. Putting in place appropriate technology offshore to monitor the measurement of oil remotely.
3. Outlining benchmarks for Corporate Social Responsibility.
4. Establishing a Depletion Policy.
5. Establishing a Decommissioning Policy.
6. Outlining a structure for what is to be expected in Field Development Plans (FPDs).
7. Strengthening key auditing agencies, specifically the Office of the Auditor General.
8. Strengthening institutions that will be responsible for the expenditure of the oil money-including the Ministry of Finance, the Ministry of Public Works and the Ministry of Health.
9. Improving Guyana’s capacity to monitor and record emissions offshore, particularly in the case of the Environmental Protection Agency (EPA).
10. Providing resources to the EPA so that it can make unannounced visits to the FPSOs while following safety standards.
11. Hire technical experts needed within the Ministry of Natural Resources, EPA, the Guyana Geology and Mines Commission (GGMC), the Guyana Revenue Authority (GRA), etc.
12. Review of massive tax concessions/ tax holidays. Example: provisions in oil contracts that allow tax exemptions on capital gains tax, personal income tax and withholding tax.
13. Updating policy/laws/regulations regarding direct and indirect transfers of interests in offshore blocks.
14. Establishing a Petroleum Commission.
15. Implement software solutions for compliance monitoring and for operating requisite controls for expenditure of oil money.
16. Update laws and regulations to address issues of ring-fencing, transfer pricing (and other financial loopholes/issues), health and safety of workers, monitoring of the environment (regarding issues such as flaring and stiff penalties for such infractions), pre-qualification criteria for oil blocks, etc.
17. Outlining a vision for the oil sector following consultation with citizenry.
18. Strengthen and increase systems for reporting on decisions in the oil and gas industry.
19. Strengthen its petroleum fiscal regime through the revision of the Petroleum [Exploration and Production] Act 1986 (PEPA), the Petroleum [Exploration and Production] Regulations 1986, as well as other tax laws and sector regulations.

20. Close other fiscal loopholes in existing Production Sharing Agreements (PSA).

21. Undertake a policy review of fiscal terms contained in existing PSAs to ensure that these are implemented appropriately, and assess areas of improvement for future investment.

22. Design a new generally applicable fiscal regime for upstream petroleum projects that increases the government take and limits the scope for individual negotiations.

23. Introduce a revised production sharing mechanism for new PSAs that provide the government with a higher share of profit oil as the profitability of projects’ increases.

24. Publish a model PSA that includes the minimum fiscal terms accepted by the government for future contracts.

25. Apply tighter ring-fencing arrangements to contracts so that oil companies would be unable to deduct the costs associated with exploring other wells or developing other projects from another field that is producing oil.

26. Define, document and share a defined national integrated plan for oil sector with clearly established Key Performance Indicators (KPIs) and timelines for achievement, supported by operational and funding plans to support implementation.

27. Transparently delineate the roles and responsibilities among and within government entities – The IDB had advised that good governance requires a clear separation between the roles and boundaries of policy making and regulation while stressing that the Department of Energy, the Guyana Geology and Mines Commission’s Petroleum Division and the Environmental Protection Agency must enact this separation.

28. Design and implement strong, legal and regulatory frameworks.

29. Develop local talent in alignment with integrated national plans.

30. Implement well-defined delivery models which promote strong planning, project management principles as well as strong leadership, management, supervisory, technical and administrative capability.

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