THE Commissioner-General of the Guyana Revenue Authority (GRA) recently announced that a team of advisers from the International Monetary Fund (IMF) will be taking up residence in Guyana for the next two years. The IMF representatives are experts in petroleum taxation and audits and can, hopefully, help build up the GRA’s own capacity to supervise the emerging oil and gas industry.

The team will be funded by the IMF and donations from the British government. The IMF has a long history in Guyana and has provided advice to the government on best practices for managing revenues for energy resources since oil was first discovered in 2015.

The IMF team embedded at GRA will be helping GRA to fulfil its mandate and working to build capacity—educating Guyanese civil servants in the niche expertise required to audit and administer tax rules for a complex industry. Most of this work will take place within a specialised Petroleum Industry Taxpayer Unit at the GRA.

The IMF previously recommended prioritising this kind of capacity- building programme in its November 2017 technical assistance report titled “Guyana: A reform agenda for petroleum taxation and revenue management.”

The assessment was requested by GRA Commissioner General Godfrey Statia and featured an evaluation of the contract terms, which it found were largely in line with those in other countries with no previous history of oil production—a finding that has since been backed up by independent analysts. It also contained a slate of recommendations for how Guyana could manage, invest, and save its oil revenues in the future.

The team of advisers from the IMF is just the latest of a number of engagements in which the IMF and other international development agencies such as the Commonwealth and World Bank are involved in Guyana. The long-term goal of this is to develop infrastructure and capacity before handing over their duties to qualified local personnel.

Last year, the World Bank helped fund the establishment of the specialised oil and gas unit inside the GRA and the World Bank will continue to provide advisers and support for building up government skills in tax assessment, regulatory issues, and other areas. The IDB has also funded a partnership project between the Guyana Power and Light (GPL) and Manitoba Hydro International to help strengthen the organisation’s capabilities.

For its part, the IMF also recommended that the GRA’s petroleum unit establish close working relations with regulators in the oil and gas sector—such as the Department of Energy, Ministry of Natural Resources, and the Petroleum Commission.

The GRA will be specifically overseeing taxation of the oil and gas industry once oil production begins in the offshore Stabroek Block sometime in 2020. Enormous revenues are expected from the Liza Phase 1 development, which is the first in a planned series of projects from the 10 successful exploration wells drilled so far.

It is crucial that Guyana has a well trained and capable tax capacity in place when the oil starts flowing. Even in the first year, when initial costs are still being recovered, analysts expect that the Guyana government will be taking in hundreds of millions of US dollars in revenue through royalties and profit sharing. That could easily rise into billions of US dollars per year by the mid-2020s as more projects come on stream.

Cost audits of offshore energy projects are a routine but hugely complex process since so much of the overall cost of oil drilling comes from hyper-specialised services such as seismic analysis and subsea engineering that are contracted out by oil companies to a variety of smaller, more specialised firms.

The presence of IMF advisers will not only help tax auditors navigate those issues, but also train a generation of local civil servants who can go on to train the next generation

themselves and perhaps some day go on to teach university or training courses. This could help create a tradition of passing on institutional knowledge in the energy sector, helping to ensure a positive long-term future for Guyana’s energy industry.