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New oil bill proves PPP promise of Petroleum Commission just a pipe dream

Jun 25, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Since assuming office in August 2020, the Peoples Progressive Party Civic (PPP/C) administration has repeatedly pledged to establish a Petroleum Commission to ensure the competent and independent management of the country’s burgeoning oil sector and reduce political control. However, with no significant progress made towards its establishment as of June 2023, recent developments have called into question whether this promise will ever be fulfilled.

The draft Petroleum Activities Bill 2023 was recently published by the government. It proposes granting sweeping powers to the Natural Resources Minister, effectively consolidating authority over the hydrocarbon industry, and makes no allowance for the creation of an independent Petroleum Commission. This law is expected to govern the oil sector for years to come.

According to the provisions outlined in the draft document, the minister would be entrusted with a wide range of responsibilities, including administering licensing for petroleum exploration, production, storage, and transportation operations. It empowers him to inspect petroleum operations, enforce corrective actions, and impose sanctions for non-compliance. Additionally, the minister would have the power to develop terms of reference and qualification criteria for the granting of exploration and production rights, as well as issue geological storage licenses for natural gas and long-term storage of carbon dioxide.

These sweeping powers bestowed upon the minister by the Bill are cause for concern. They represent a significant expansion of political authority over Guyana’s oil and gas sector. The absence of provisions in the Bill that would enable the minister to cede these powers to an independent Petroleum Commission is particularly troubling for some stakeholders.

By concentrating power in the hands of a single individual, as outlined in the Petroleum Activities Bill, the potential for corruption is amplified. The absence of an independent oversight body to provide accountability and transparency further exacerbates this risk.

When decision-making authority, such as the licensing of exploration and production operations, rests solely with a minister, there is an inherent vulnerability to undue influence and favouritism, compromising the integrity of the sector.

Such concentration of power in the hands of a single individual risks undermining the principles of transparency, accountability, and expertise that an independent commission could provide. An effective and impartial oversight body, staffed by competent technocrats, would be better equipped to regulate and manage the complexities of the oil sector. These arguments have often been made by Vice President Dr. Bharrat Jagdeo, the sector’s chief policymaker.

The failure to establish a Petroleum Commission thus far, combined with the content of the Petroleum Activities Bill 2023, suggests to some stakeholders that the PPP/C administration’s promise of an independent commission is nothing but a pipe dream.

The Vice President, Dr. Bharrat Jagdeo last Thursday addressed the question of a Petroleum Commission during a press conference. He said that the powers given to the Minister in the Petroleum Activities Bill can be delegated to other agencies. However, the Vice President gave no timeline for the establishment of the Petroleum Commission, which he insisted is still on the roster.

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