Guyana left open to abuse by not utilising US$20M World Bank loan to strengthen management of oil sector – Former Finance Minister

Jul 29, 2022 News

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Kaieteur News – Former Finance Minister, Winston Jordan believes Guyana is taking several steps backward by failing to make prompt use of a US$20M World Bank loan that was taken in 2019 to strengthen the country’s capacity to govern the oil sector.

In an interview with this newspaper recently, the economist expressed disappointment that the government appears to have two faces when it comes to the sector. He said the administration is very vocal about wanting the industry to be enveloped by transparency, however, its dealings with the loan, tell a different story. Jordan acknowledged that the coalition regime made several wrong turns during its time in managing the sector. Be that as it may, Jordan said it is now more critical than ever that the government demonstrate that it is learning from the mistakes of its predecessor.

Expounding further, Jordan said the country’s failure to utilize a loan that would equip it with the regulatory and institutional might to protect the sector from wanton abuse is a frightening prospective for any citizen to contemplate.

The former Finance Minister said, “I agree with sentiments that Guyana is taking several steps backward with its failure to utilize this loan which the APNU+AFC coalition signed onto. And clearly, there are two faces when it comes to the management of the sector; that is clear to all. Guyana is being used and abused both by foreigners and by locals and in many ways, this government does not have the fortitude.”

He continued, “Yes we made our own mistakes when it comes to the sector and the learning curve has been very steep when you attempt things you have no prior experience with. But we came up against Exxon which has decades of years of experience versus Guyana which you can count in single digits. One of the things about governance is that when you fall down, you have to make sure that you don’t make the same mistakes again. It does not appear that the government has learned from us.”

The former minister said it is imperative that the government demonstrates that it is learning; that the country has a strong foothold while alluding that the failure to do so puts the country in an even more weakened state before the behemoth that is Exxon. “When we were in office, we were fair game for others and so you heard a lot of statements about ‘We will renegotiate the 2016 Exxon contract when we get in there’ and ‘we will take a tougher line when we get in there’ and so you heard all of those things. But now that the tables of turn, we are left to worry even more…We appear to be worse off than we were before,” expressed the economist.

Jordan in closing recalled that the loan was intended to ensure Guyana is armed with the mechanisms necessary to claw back value that could be lost in the sector and to ensure she is endowed with the expertise necessary to protect herself from various forms of abuse. He is of the view that Guyana will continue to be in a most vulnerable position if this state of affairs is not addressed with some degree of alacrity.

Kaieteur News previously reported that since the PPP/C Government took office in 2020, it has not requested any disbursements from the World Bank for US$20M loan.

The latest implementation status and results (ISR) report recalls that the money was approved on March 29, 2019 for the Guyana Petroleum Resources Governance and Management Project (GPRGMP). The programme’s objective is to ensure the enhancement of legal and institutional frameworks and the strengthening of the capacity of key institutions to manage the oil and gas sector.
A Financing Agreement in the amount of US$20 million was signed and declared effective on April 11, 2019 under the David Granger administration. The ISR, which was reviewed by Kaieteur News, presents the implementation status of GPRGMP as of March 2022.

The financial institution said, “The project’s overall implementation has been downgraded to ‘Moderately Unsatisfactory’, with around 24% of the total credit disbursed and no disbursement requests received by the Bank since October 2020.”
Starting in the early part of the second quarter of 2021 and following a seven-month hiatus, the bank said traction with, and engagement by the client had improved markedly under the Ministry of Natural Resources leadership, and momentum on procurement activities picked up considerably.

However, starting in the fourth quarter of last year, the bank said project implementation came to a halt, particularly on critical procurement activities intended to have helped the project reacquire its implementation timeline, and meet its indicators and performance objectives.

The bank in its report said that the government has indicated as recently as late December 2021, its intention to “refine the scope of the project to bring it in line with current government priorities.” That process is still ongoing.  In the meantime, the World Bank said it remains on standby awaiting any guidance from the Government of Guyana on the status and direction of the project and a resumption of critical project activities.

 

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