The Petroleum Activities Bill appears to conflict with the Constitution

Aug 17, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – When in Opposition, Bharrat Jagdeo was opposed to politicians having control over the country’s oil revenues. This newspaper quoted him as saying, “We don’t want politicians to manage this money. This fund has to be independently (and) technically managed not by politicians and stored by Central Bank. We have a problem with that model and it departs radically from best practices such as (those observed by nations like) Norway and others where they have an independent group that manages this.”

When the PPPC amended the Natural Resource Fund Act it instituted a Board, a Public Oversight and Accountability Committee and an Investment Committee. The Board does not consist of any active politicians. As such it is considered as apolitical. No politician has also been appointed to the other two bodies. In this regard, in relation to appointments, the government can be said to have stuck to its philosophy of insulating the management and oversight of the NRF from direct political management.

However, as has been pointed out, the Act itself allows the Minister of Finance considerable influence over the Fund. So while no politician is presently represented on the Board, Oversight Committee and Investment Committee, the Board and the Investment Committee are guided by directives from the Minister of Finance.

Section 5(8) of the NRF Act provides that the Minister, a political figure, may give general policy direction to the members of the Board and they shall give effect to such directives. It is also the Minister that appoints the Investment Committee and who, in accordance with Section 27(h), provides directions relating to the Investment Mandate.

When in Opposition, Jagdeo was also opposed to having the Bank of Guyana manage the Natural Resource Fund. But it appears as if his government has had change of heart. For, as is being reported, the new Natural Resource Fund Act 2021, which was passed by the PPPC in December 2021, gives the Bank of Guyana the responsibility for the operational management of the Fund.

As has been pointed out by Professor Tarron Khemraj, fiscal policy is the remit of the political administration. While the Board and Investment Committee may exercise control over the Fund, based on directives from the Minister, it is the political administration which has complete control over the specific uses to which the proceeds of the Fund are put. So much so for insulating the fund from political control!

In 2018, the PPPC was strongly opposed to political influence over the NRF. By 2021, this position had been diluted and has been further watered-down by the recently passed Petroleum Activities Bill.

The Bill, that will soon become law, assigns vast-ranging and broad powers to the Minister responsible for petroleum. These powers are of such a general nature that they can allow for intrusion into operational matters rather than limiting the Minister to providing general policy directives. For example, the powers of the Minister include the licensing of petroleum exploration, development, production, transportation and storage. They also include monitoring petroleum operations to ensure compliance with the Act and the terms and conditions of a license, permit or agreement entered into under the Act. In other words, the Minister virtually replaces the Petroleum Commission.

It its criticisms of the Petroleum Activities Bill, the Opposition called for an independent Petroleum Commission so as to insulate the sector from political partisanship. It should be recalled that under the draft Petroleum Commission Bill, developed by the APNU+AFC, the powers of the Minister were severely cut.

The government has not sought to hide the fact that under the Petroleum Activities Bill the Minister has wide-ranging and broad powers. In the National Assembly, it was conceded that, “This Executive has chosen the model where the powers fall with the minister and we stand and fall by that.”

The powers of the Minister, under that legislation, go beyond providing general policy directives. In fact, the Petroleum Activities Bill specifies that the Minister has responsibility for exercising any other powers required for the management of petroleum resources and operations. It is the Minister who grants a production, exploration and other licenses under the Bill.

These powers appear to conflict with the Constitution of Guyana.  Article 115 of the Constitution limits the role of the Minister, responsible for any department of government, to exercising ‘general direction and control’, a euphemism for making policy.  It is trite law that parliament may limit the exercise of powers which are conferred on a Minister but cannot expand these beyond the boundaries provided by the Constitution.

The PPPC therefore has come full circle. Instead of seeking to insulate decision-making and authority in the petroleum sector from political control, the PPPC is now pursuing a model of development that gives the subject Minister excessive powers in relation to the oil and gas sector. That surely, given the experiences of other countries in managing their oil resources and wealth, is disconcerting.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Bharrat Jagdeo, Constitution, opposition, Peeping Tom, radically

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