Oil money Board and Committees toothless, useless- Former Finance Minister

Dec 09, 2024 News

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…former Coalition Gov’t had commenced talks with Commonwealth to establish regulations to identify use of NRF

Kaieteur News- Former Finance Minister Winston Jordan has described the Board of Directors as well as the two Committees provided for by the Natural Resource Fund (NRF) Act of 2021 as toothless and useless.

During an online broadcast, ‘The Countdown’, on Sunday, Jordan delved into the ongoing debate surrounding the lack of transparency in the use of revenue garnered from the oil and gas industry.

He shared the view that the NRF Act, passed by this administration, makes provision for a Board of Directors to aid in transparency of the Fund. However, this body has only managed to produce a report annually, with regurgitated newspaper articles on the activities of the fund such as how much was deposited.

Jordan explained that the legislation provides for the appointment of a Board with no less than three and no more than five members, to be appointed by the President. He observed that this feature amounts to no less than a political Board.

Moving on to the functions of this body, he explained that the Board is tasked with the overall management of the Fund; reviewing and approving the policies of the fund; ensuring compliance with the approved policies of the Fund; exercising general oversight of all aspects of the Fund’s operations and ensuring that the Fund is managed in compliance with the Act and all other applicable laws.

Jordan expressed for listeners and viewers of the programme, his thoughts on the performance of the Board, relative to its legally required functions.

According to him, “The Board cannot tell the government when to withdraw and how much to withdraw. Indeed, how much to withdraw is already in the Act…so essentially, the Board is managing a thin slice of the Fund. They are not managing the Fund, they are managing a thin slice, no more than maybe 10% of the funds that go into the Fund.”

With regard to reviewing and approving policies of the NRF, the former Finance Minister questioned the existence of such. “What policies of the fund? Like how many times they are going to meet? What are they going to discuss? They are only going to discuss this thin slice. There is nothing else to discuss,” he contended.

On the other hand, he questioned the compliance feature of the Board. He questioned, “Who they ensuring compliance by and where are these policies anyhow? Are they made public? Are they in the Gazette? Are they in a manual?”

Finally, he said, “What oversight is this Board exercising over the massive sums of money the government has withdrawn from the Fund and has been withdrawing from the Fund so far?”

Rubberstamps vs transparency  

Jordan argued that the government pulled over 70% of the provisions from the previous NRF Act, knocking-out key safeguards instituted for transparency purposes.

He said since 2022 he warned that the Board as well as the two committees are rubberstamps. Jordan argued, “They are toothless and useless where the management of this Fund is concerned and I’ve been proven correct.”

The former Minister admitted that the while the previous legislation made no provision for a Board of Directors, it required the establishment of a Public Accountability Oversight Committee, which was tasked with monitoring and evaluating the compliance of the government and other relevant persons with the Act; monitoring and evaluating whether the Fund has been managed in accordance with the principles of transparency, good governance and international best practices including the Santiago Principles; providing independent assessment of the management of the Fund; utilization of withdrawals from the Fund and facilitating public consultations on the management of the fund.

Jordan was keen to note that this body comprised of 22 stakeholders, including civil society, the Bar Association of Guyana, the Guyana Extractive Industries and Transparency Initiative, Transparency Institute, the Guyana Press Association, Trade Unions, Chartered Accountant, Private Sector Commission and University of Guyana, among others.

He said while former President David Granger was adamant to set up a specific fund to save the wealth generated from the sector, this government was more interested in having the resources pooled into the Consolidated Fund to co-mingle with other revenue streams.

He pointed out that while the government failed at removing the NRF law, it has emasculated it in a manner that leaves little or nothing for generational savings and to buffer the economy in the event of lower oil prices.

 Discussions with Commonwealth for NRF Regulations

Further, Jordan noted that the previous Act also provided for national development priorities to be funded through oil resources; however, Guyana was encouraged by the Commonwealth to develop regulations to clearly define details, such as how the money would be accounted for in the Budget. This includes a special line to identify the projects being financed through oil revenue. This would also mean that these ventures would be subjected to a special audit. To this end, Jordan said, “All of this should have been in regulation and we had just started discussions with the Commonwealth about assistance for developing the regulations of the Fund.”

He added, “It is unfortunate that national development priorities are, today, being blamed…but the general idea was that that would have been the granular details, national development priorities would have been put in regulations.”

The former Minister and Member of Parliament highlighted that the Law currently provides for the Minister of Finance to develop regulations for the Fund. Be that as it may, he pointed out that there are presently no regulations governing the revenues from oil and gas. Jordan also made it clear that he is confident there will not be a shift to this direction.

In the meantime, he explained that the former government intended to have revenues from oil be used to finance selective programmes and projects, which would be clearly itemized in the Budget. For instance, he listed the new Demerara River Crossing as a key example of a national development priority that would have been financed through this stream as well as the Georgetown to Lethem roadway, hospitals and modern schools among others, like a cash transfer.

“We had our ideas. Not for any and everything to be financed by the Natural Resource Fund.”

Jordan’s comments stem from the recent statements made by Vice President and Chief Policymaker for the Oil and Gas Sector, Dr. Bharrat Jagdeo, who told reporters during his press conference on December 5, 2024, that showing how oil money is being used would be difficult.

He explained, “How do you balkanize revenue coming into the Budget? (It) becomes a very difficult thing to do. So, where the transparency is done, transparency is that every cent spent from oil money, from non-oil revenue and from borrowing has to be appropriated by the National Assembly through a Budgetary Appropriation Process, whether it is the original Budget or through Supplementary Budgets, which then form an appropriation act or a supplementary appropriation act, which itemizes all of the expenditure of the state and how much is going to be spent…”

(Oil money Board and Committees toothless, useless- Former Finance Minister)

(Oil money Board)

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• Board, Commonwealth regulations, Jordan, money, oil, spent, useless

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