Systems to realize maximum value in Guyana’s oil sector weak - Int’l Body

Systems to realize maximum value in Guyana’s oil sector weak – Int’l Body

Jul 14, 2021 News

– Says country secured weak score on performance index

Kaieteur News – The Natural Resource Governance Institute (NRGI) disclosed this week that Guyana’s oil and gas sector has placed in the “weak” performance band of its 2021 Resource Governance Index (RGI), with a score of 55 out of 100 points.
Kaieteur News had previously reported that the 2021 RGI assesses how 18 resource-rich countries govern their oil, gas and mineral wealth. The index score is made up of three components. Two measure key characteristics of the extractives sector – value realisation and revenue management – and the third captures the broader context of governance — the enabling environment. These three overarching dimensions of governance consist of 14 subcomponents, which comprise 51 indicators, which are calculated by aggregating 136 questions.
Independent researchers, overseen by NRGI, in each of the 18 countries completed a questionnaire to gather primary data on value realisation and revenue management. For the third component, the RGI draws on external data from over 20 international organisations.
Its assessment of Guyana covers the period 2019-2020. Following this exercise, NRGI said in its report that as a new producer, Guyana is yet to develop the institutional framework to successfully govern its oil and gas sector. In fact, NRGI said it was able to find evidence of weakness in the areas of value realisation, revenue management and the overall enabling environment. Considering this, NRGI stressed that the government should prioritise the development of a robust resource governance framework, considering that production started in 2019 and is well underway.
Expounding further, NRGI said the legal framework governing Guyana’s licensing process for oil licences is cause for concern. It was keen to note however that the local authorities have taken considerable time to disclose contracts, with negotiations and re-negotiations taking place behind closed doors.
It said too that the absence of fiscal rules governing public spending merit attention. NRGI therefore noted that Guyana’s Government should establish such rules as soon as possible.
Further to this, the Institute articulated that Guyana’s enabling environment is also weak. It said that government effectiveness and regulatory quality are problematic, but commitment to open data standards is the most concerning indicator, with a “failing” score of just 12 points. “The governance of the sector, both in terms of successful policymaking and public accountability, would benefit from an adherence to open data principles,” NRGI stated.
On the positive side, NRGI said government manages local impacts of the sector in line with best practices while adding that environmental and social impact assessments are publicly available.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News