The government is aiming to have its local content policy legislation and amendments to the Natural Resource Fund Act debated in the National Assembly by the end of 2021, according to President Irfaan Ali.
The President, during a press conference yesterday, said that technical teams from Ghana are expected to arrive in the country in early November and will be reviewing a number of pieces of oil and gas-related legislation and projects.
“They will work with us on the finalization of our local content legislation and will assist in the amendment of the sovereign wealth fund legislation. The first phase of this technical team, which are the CEOs, the highly competent persons in these specific areas, will be here very early in the new month to start work. All of these areas – the local content legislation, the amendment to the sovereign wealth fund legislation are to be tabled in the National Assembly and debated before the end of this year,” President Ali informed.
The visit of the technical teams is a result of bilateral talks between President Ali and the President of Ghana, Nana Addo Dankwa Akufo-Addo earlier in the year. That was concretised by a recent visit to the African state by Vice President Bharrat Jagdeo and a team.
Ever since the tabling of the Natural Resource Fund Bill on November 15, 2018, the PPP/C (which served as the political opposition at the time) had been critical of the legislation. The passage of the bill was also controversial since it was done following the successful December 21, 2018, no-confidence motion against the then APNU+AFC government.
Former President David Granger gave the bill his seal of approval in January of 2019.
The NRF Act provides for the establishment of a Fund to manage natural resource wealth in an effective and efficient manner by (a) ensuring that volatility in natural resource revenues does not lead to volatile public spending; (b) ensuring the revenues do not lead to a loss of economic competitiveness; (c) fairly transferring the wealth across generations to ensure that future generations benefit from it; and (d) using the wealth to finance national development priorities, including green economy initiatives.
Section 3(3) states that the NRF shall be a public fund to be held in the name of the Bank of Guyana on behalf of the government and the people. Section 4 specifically caters for the NRF to be “managed according to the principles of good governance, including transparency and accountability, and international best practices, including the Santiago Principles.”
According to Part IV of the bill, the minister shall be responsible for the “overall” management of the fund as well as the preparation of the Investment Mandate and in doing so will seek the advice of the Investment Committee, be assisted by the Senior Investment Advisor and Analyst and enter into an operational agreement with the Bank for the operational management of the fund.
Jagdeo, as Opposition Leader, had said that the NRF Act is weak in terms of keeping politicians away from its management.
Guyana currently has US$436 million sitting in an account at the New York Federal Reserve Bank from oil proceeds with no means of accessing it since the NRF legislation provides for the establishment of a number of committees in order for the Fund to be activated.
Since taking office in August last year, the Ali-led government has promised amendments to the legislation but made no attempt to date. The World Bank has since called on the government to operationalize the NRF early. In recent weeks US government officials have also stressed the importance of the NRF law and a local content policy.
In relation to the local content legislation, Guyana has been accused of dithering since oil was discovered in Guyana over six years ago.
Earlier this week, Attorney General Anil Nandlall told Stabroek News that the draft Local Content Bill is currently being ‘fine-tuned’ before it is laid in Parliament. The First Schedule of the Bill focuses heavily on the oil and gas sector.
Additionally, local private sector bodies have been complaining about the unfair treatment their members are receiving. The absence of the local content legislation, according to the private sector bodies, has resulted in more foreign companies accessing contracts and benefitting from Guyana’s oil and gas industry.
Gas to shore project
The gas to shore to energy project is pegged at around US$900 million. It entails the construction and operation of a 12-inch pipeline, approximately 220 kilometres long, from the Liza Phase 1 and Liza Phase 2 Floating, Production, Storage, and Offloading (FPSO) vessels in the offshore Stabroek Block, to an onshore natural gas liquids (NGL) and natural gas processing plant (NGL Plant) located at Wales.
Yesterday, the President said that the Ghanaian technical teams will also assess the work done in relation to the project.
“Vice President Jagdeo led a team to Ghana the outcome of which included technical teams that will be here shortly to give the review work on the gas to shore energy project and to give us their opinion and technical views,” President Ali informed.
The Vice President of Ghana is expected to visit Guyana sometime later this year and the President will participate in the Oil and Gas Conference scheduled for February next year.
“So in addition to the technical teams and the cooperation at the bilateral level, we have also established an opportunity for cooperation and collaboration and partnership with the private sector from Ghana and that of Guyana, and a team from Ghana will be here in Guyana to look at this specifically,” Ali said.
Questions have been raised as to why the government here is relying on Ghanaian expertise. Ghana is a relative newcomer to the oil and gas arena and questions have been raised about the decisions it has been made in the industry and the risk of it ending up with stranded assets and unsustainable debt.
Moreover, the government has already benefited from assistance via the World Bank and other multilateral agencies on some of these areas that Ghanaian officials will review.
