– to build capacity in oil and gas sector

GUYANA is expected to access an advance from a US$20M World Bank loan to build capacity in the oil and gas industry by June.

Minister of Natural Resources, Raphael Trotman, said the government would like to access an advance of US$1.7M but needed to “urgently” establish a Project Implementation Unit (PIU). The PIU, spearheaded by the Ministry of Natural Resources, must include a coordinator, financial director and have procurement capacities among other requirements.
“Once those are in place we can receive the advance, and the larger tranche (portion) will be forthcoming towards the end of the year,” Minister Trotman explained to members of the media following a meeting with World Bank officials at his office on Tuesday.
The loan will be used to build oil and gas capacity in three important areas. “Strengthening the regulatory framework, working with the government on the issues of bringing the gas to shore and the other one is just general capacity-building,” he further explained.
Funds will also be used to build the capacity of the Guyana Revenue Authority (GRA) and other institutions that will monitor cost recovery and similar measures in the oil and gas industry.

Minister Trotman was joined at the meeting by Minister within the Ministry of Natural Resources, Simona Broomes, when they met with the World Bank’s Country Director for Caribbean Countries and Latin America, Tahseen Sayed, along with other technical experts to discuss the loan which was secured by Minister of Finance, Winston Jordan.
Sayed noted that the World Bank’s International Development Association (IDA) has “significantly increased more than three-fold the allocation for Guyana” from mid-2018. IDA is the concessional financing window of the World Bank.

Guyana’s allocations now stand at US$85M over a three-year period, Sayed explained. The US$20M loan is part of this allocation, she added. The World Bank has been working with the Ministry of Finance to support micro-fiscal and financial sector reforms “which we believe are extremely important to anchor the boom of the oil discovery that is coming to Guyana”, Sayed noted. Minister Trotman stated that the World Bank will be the country’s primary financial institution in the development of the oil and gas industry.
In addition, last month government announced that Ministers and Members of Parliament are to be the target audience of a high-level workshop on May 21, 2018 being facilitated by the World Bank. Minister of State Joseph Harmon had told reporters that Guyana had applied to the World Bank for a US$20M loan to aid in capacity-building for the country’s budding oil and gas sectors. As part of that request, two experts from the financial institution will travel to Guyana to conduct the workshop.

The workshop, according to Harmon, will focus on the Sovereign Wealth Fund (SWF), its fiscal arrangements, rules and best practices, along with other matters pertinent to the oil-and-gas sector. Harmon said, too, that Finance Minister Winston Jordan, in his briefing to Cabinet last Tuesday, reported that the World Bank has also offered to provide assistance by way of workshops for the Department of Energy.

It was Minister Jordan who first announced that Guyana will benefit from the US$20M loan from the World Bank. He had told reporters at a press conference that the money is to be used for oil and gas development, and that one aspect is the examination of legislation that would be required to be put in place to improve the country’s architecture for the sector.
The minister stated that Guyana lacks legislative and other framework for the new sector, and noted that the government is working assiduously to ensure that mechanisms are in place in time for first oil, come 2020.

“We have no direct legislation like local content, SWF (Sovereign Wealth Fund), Petroleum Commission Bill, Petroleum Fiscal Regime legislation,” he said, adding: “And plus, we don’t have people to draft them. So, under this loan, we have to bring people to help us draft these pieces of legislation.”

Guyana’s petroleum regime is governed by the Petroleum (Exploration and Production) Act 1986 (PEPA), and the Petroleum (Exploration and Production) Regulations 1986, among other regulations.