Latest update December 16th, 2024 9:00 AM
World Bank agrees to restructure US$20 million loan for oil sector
Kaieteur News – The Guyana Government, via its Ministry of Natural Resources, has convinced the World Bank to restructure a US$20M loan, initially approved in March 2019. This loan aims to fortify in-country expertise for the burgeoning oil sector.
The crux of this restructuring request involves an extension to the project’s closing date, pushing it from its original date of March 30, 2024, by a substantial 21 months. Consequently, the revised deadline will be December 31, 2025.
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According to documents seen by Kaieteur News, this marks the inaugural restructuring of the project. It is worth noting that all audit reports concerning this endeavour are current and have been given the nod of approval by the World Bank. The records also indicate that there aren’t any outstanding audit matters.
Financial data reveals that, up to this point, 45 percent (or US$8.59M) of the loan has been disbursed. Out of this, the actual documented spending stands at US$6.52 million. This equates to 33 percent of the total loan amount. These figures have raised eyebrows at the World Bank, with the institution highlighting a significant delay in the financial implementation.
A statement from the World Bank expressed concerns that, given the current pace, the loan’s full disbursement before the original closing date is an unrealistic expectation. As a result, the Guyana Government sought the aforementioned extension.
February 2023 saw the World Bank deployed a Technical Mission, which paved the way for the recent Midterm Review (MTR) held in June 2023. This mission scrutinized and endorsed a series of measures designed to counteract the perceived underperformance and to align the project more closely with the Guyanese Government’s reshuffled priorities. A significant outcome of these discussions was the consensus on the new project’s deadline and a revised allocation of resources.
Sources familiar with the matter informed this publication that part of the funds will be redirected to other areas related to addressing the capacity constraints for management of the oil sector. This pivot is a direct response to the unexpected needs stemming from the swift acceleration of Guyana’s oil production and export activities since March 2019.
The World Bank, reflecting on the project’s journey, commented on the evident momentum gained recently. It pointed to the successful awarding of consulting contracts, which bolster two primary facets of the project. The financial institution also noted that Component A focuses on refining the legal framework and enhancing stakeholder relations, while Component B zeroes in on the capacity building of pivotal institutions. These strides, the Bank opined, are indicative of an upswing in both procurement and implementation.
Given the recent surge in activities and the mutual understanding regarding future milestones, the World Bank concludes that the revised deadline is both appropriate and justified.
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