The Inter-American Development Bank (IDB) says while it funded studies on the use of associated gas from offshore oil for power it had no role in the selection of Wales, West Bank Demerara as the site for a planned energy plant.
“The IDB’s work generally supported the Government of Guyana’s (GoG) effort to build a robust framework for the governance of the oil and gas sector by aiming to increase the institutional technical capacity and manage oil revenue collections,” IDB Country Representative Sophie Makonnen said in response to questions from Stabroek News.
She pointed out that the IDB also “supported Guyana’s gas-to-power options through studies reviewing the use of associated natural gas to transition towards a cleaner and diversified energy matrix considering the information available and provided by Government at that time.”
“The objective of these studies was aimed at filling future potential electricity demand along with the development of renewable sources of energy,” she explained.
The Country Representative was asked about the IDB’s views on the gas-to-shore project, against the background that it had assisted this country with developing a strategy for the optimal use of indigenous natural gas. She was also asked if the bank was satisfied with the justification given for the selection of the site.
This newspaper also sought to ascertain if the IDB, a major financier in the energy sector here, was concerned that at a time when the world was moving towards renewables, that Guyana was focused on a project using associated gases and advice on what should be the energy mix for Guyana.
As it pertains to the PPP/C government’s selection of Wales, West Bank Demerara, as the location for the landing of the gas to shore project, she confirmed that the bank played no part in the process.
“With regard to the selection of the location for landing of pipelines, the Bank was not part of this process and it is our understanding that the Government of Guyana has reviewed alternative locations,” Makonnen stated.
In December of 2018, the Bank announced that it had extended a US$11.64 million policy-based loan to be assigned to a project aimed at supporting the strengthening and the sustainability of the energy sector in Guyana by contributing to the institutional development of oil and gas governance and the development of cleaner energy sources for electricity generation.
The specific objectives of the loan were to develop a management and planning framework for Guyana’s oil and gas sector and to contribute towards the development of a policy framework so that Guyana may diversify its electricity generation matrix by utilising cleaner or renewable sources.
The agreed-upon policy commitments of the first tranche of the programme were the setting up of the Department of Energy (DoE) within the then Ministry of the Presidency to assume responsibilities related to the oil and gas sector; the approval by the DoE of a draft roadmap for Guyana’s oil and gas institutional framework, and the design of a model contract for Production Sharing Agreements (PSA).
Following this, the agreed-upon policy commitments for the second tranche were the development, for the DoE, of a functions’ manual, establishing its organisational structure, budget and staff allocation, a PSA set of protocols and mechanisms for contract management; and an oil and gas depletion policy, designed by the DoE and presented for approval to then Ministry of the Presidency.
While the DoE building is still in existence, since the PPP/C took office in August of 2020, functions of the agency have been moved to the Office of the President and the Ministry of Natural Resources. The agency’s head Dr Mark Bynoe was fired and neither he nor the APNU+AFC have made public, the works that were completed by the agency and what plans were left.
Giving an oversight from Bank’s perspective of the oil and gas sector since 2015, Makonnen said that the discoveries represent a significant shift in Guyana’s development trajectory.
“Since 2015, approximately 9 billion oil-equivalent barrels of recoverable petroleum resources have been discovered off the country’s Atlantic coastline. This latest industry brings tremendous opportunities and significant challenges for a new oil-producing country such as Guyana. These challenges include reviewing and updating Guyana’s current oil and gas legal and regulatory framework and strengthening institutions in terms of contract management, oil and gas revenue administration, and oversight,” she said.
“In the face of these institutional challenges, the Inter-American Development Bank has supported the Government of Guyana to strengthen governance and its capacity to manage this nascent sector, through investment loans and specialised technical assistance. The IDB’s areas of support were mostly in the following areas: Strengthen oversight capacity through supporting production control and verification processes; strengthen capacity by providing general training and support to key agencies within the sector’s regulatory framework with specific attention to the use of contract management systems; support the design and implementation of policies and studies that aim to foster and promote the development of new renewable and cleaner energy sources into the electricity generation matrix,” she added.
Makonnen pointed out that throughout the world, it is evident that countries “are developing plans to transition towards cleaner sources of energy which include natural gas and renewable energy.”
It is to this end she declared, “The Bank remains ready to support the Government of Guyana achieve its objectives of strengthening the sector’s architecture, governance, and capacity to support inclusive growth and sustainable economic development.”
