Govt. cancels US$3M from US$20M World Bank loan intended to strengthen oil governance

Mar 25, 2026 News

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– key reforms abandoned – World Bank

– Communications strategy scrapped

– Fiscal management component axed

– Critical oil studies left unfinished

– Technical support for Natural Resources Ministry incomplete

By Davina Bagot

(Kaieteur News) – The Government of Guyana has cancelled more than U.S.$3 million from a U.S.$20 million World Bank loan aimed at strengthening oversight of the oil and gas sector, abandoning several key reforms in the process.

According to a World Bank Project Paper dated December 24, 2025, the cuts form part of a third restructuring of the Guyana Petroleum Resources Governance and Management Project (GPRGMP), with multiple core deliverables left incomplete at the project’s close.

The axed reforms include: the preparation of a sector communications strategy; a second phase technical assistance program for the Ministry of Natural Resources (MNR) and the finalisation of the Strategic Environmental and Social Assessment (SESA) while an entire component of the loan aimed at enhancing fiscal management has been dropped at the request of government.

The project paper stated that Guyana only achieved one of three objectives under the programme for the country to publish Extractive Industries Transparency Initiative (EITI) reports. The World Bank also noted that four out of five legal and regulatory acts for the sector have been prepared under the project, submitted to the National Assembly and approved while a number of additional regulatory drafts were produced.

Additionally, the financial institution said the project has provided crucial support to the MNR, the Environmental Protection Agency (EPA), and the Guyana EITI Secretariat. This included capacity building and the provision of technical tools, such as EPA’s satellite-based monitoring system for offshore oil and gas activities.

The World Bank explained, “Despite these successes, some activities, such as the finalisation of the Strategic Environmental and Social Assessment (SESA) (the third Project Development Objective (PDO) indicator), preparation of a sector communications strategy and a second phase technical assistance program for the MNR could not be completed by the project’s closing date.”

Further, the bank added, “A fourth PDO indicator, together with two intermediate indicators attached to partially cancelled Component C – Enhancement of Fiscal Management, were dropped at the client’s request during the project’s second restructuring in April 2025.”

SESA was intended to include an analysis of socio-economic aspects of typical oil and gas operations, including areas for strengthening of involuntary resettlement policies, guidelines and practice standards in Guyana, which can complement the local policies associated with resettlement.

Moreover, the strategic environmental and social implications and impacts of the proposed oil and gas legal and regulatory framework were to be examined and assessed in the Strategic Environmental and Social Assessment (SESA).

Third restructuring of loan

The World Bank said it received a letter from the Ministry of Finance on December 15, 2025 and dated December 11, 2025 for the cancellation of U.S.$3,177,153. GoG and the institution agreed to a closure of the loan on December 31, 2025. There was also an agreement that the cancelled funds will be returned to Guyana’s general International Development Association (IDA) allocation, where they can be reprogrammed to support other national priorities aligned to the Country Partnership Framework.

About the World Bank U.S.$20M loan

The Guyana Petroleum Resources Governance and Management Project (GPRGMP) was approved by the World Bank on March 29, 2019 under the David Granger administration. In April 2022, Kaieteur News reported that the PPP/C Government did not request any disbursements from the U.S.$20M loan, three years after it was declared effective.

The project was aimed at supporting the enhancement of legal and institutional frameworks and the strengthening of the capacity of key institutions to manage the oil and gas sector in Guyana. It featured four components; namely: (A) Enhancement of Legal Framework and Stakeholder Engagement; (B) Capacity Building of Key Institutions; (C) Enhancement of Fiscal Management; and (D) Project Management & Project Preparation Facility.

The key beneficiaries of the project were the Department of Energy (DE, replaced by the Ministry of Natural Resources under the new administration in 2020), the Guyana Geology and Mines Commission (GGMC), the Ministry of Finance (MOF), the Environmental Protection Agency (EPA), and the Attorney General’s Chambers (AGC).

Guyana began producing oil in December 2019 following the country’s first discovery in 2015 by ExxonMobil.

The World Bank stated that the size of the discoveries presented a historic opportunity for Guyana to leverage the revenues generated from oil production into sustainable development and inclusive growth. “A well-managed oil and gas sector can bring huge positive and sustainable impacts to Guyana, including socio-economic growth and positive economic externalities…Guyana has never been an oil and gas producer, and as such lacks the policy, legal and regulatory frameworks and institutional capacity needed to maximise the benefits and minimise downside risks associated with the sector,” the bank explained.

Moreover, the financial institution warned that if the sector was poorly managed, the development of oil and gas resources can be economically and socially costly for a country. In approving financing for the programme, the bank noted that there was a large capacity gap at the political and technical levels responsible for the management and oversight of Guyana’s petroleum sector.  “The buildup of institutional capacity is crucial to improve the Government of Guyana’s bargaining power vis-à-vis investors in situations of negotiations, oversight, and enforcement,” the bank said.

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• Fiscal Management, Natural Resources Ministry, Oil and Gas, oil studies, World Bank

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