By Kemol King
SENIOR Minister with responsibility for Finance, Dr. Ashni Singh, has promised a duo of bills for local content and the Natural Resource Fund (NRF), which, once passed by the National Assembly and accented to by President Dr. Irfaan Ali, will establish a strong framework for managing the oil and gas sector.

The bills are scheduled to be tabled in the National Assembly today after a little more than a year of the new government being in office.

“We look forward to these two critical bills being tabled in Parliament tomorrow. We look forward to a rich and lively debate in the Parliament,” Dr. Singh said.

He added: “We hope that good sense will prevail and that the Bills will be seen for their merits and that they will enjoy smooth and unanimous passage through the Parliament. That is my fervent wish because we need these pieces of legislation critically in place.”

The minister said that despite the “occasional rancour” of Guyana’s political environment, the government made a conscious effort to preserve some of what the previous administration intended to do. So, he hopes the Opposition would recognise this virtue.

The minister was referring to the NRF bill, which will be an amendment of the current Act, instead of a new Act.

The government had examined the question of whether the new Natural Resource Fund should be amended or repealed and replaced.

This is because of the “legally unsound” footing of the Bill, given that it was passed in January 2019 after the David Granger administration was defeated in the National Assembly by a vote of no confidence on December 21, 2018.

The minister said the Act has a fundamental flaw, which questions its legitimacy and constitutionality.

In addition to this issue, Dr. Singh revealed that the government could find no record that the Act was brought into operation by the issuance of a commencement order.

This order, he said, is required by Section 1 of the Act. The government also believes that there are issues with the contents of the Act.

Firstly, Dr. Singh pointed out that critical governance structures are missing from the Act, which has alternate governance structures that seek to create a smokescreen that there is some form of governance. There is no board of directors for the Fund, in its current configuration.

“Instead, all of the powers that would traditionally be vested in a board of directors, all of those powers are vested in a Minister,” Dr. Singh said.

SMOKESCREEN
The smokescreen the minister referred to is the public accountability and oversight committee, which draws its members with a wide castnet from all across Guyana.

Minister Singh said such a committee cannot be substituted for a board and perform day-to-day oversight of the Fund, including approval of operational policies and assessment of performance.

“That’s the role of a professional board of directors. It’s not the role of a multi-stakeholder committee. We would be the first to champion multi-stakeholder committees from the standpoint of access to information, performance of non-governmental oversight functions, accountability arrangements and so on.

“So, what you have here – you have no board of directors. You have a 22-member multi-stakeholder committee, which basically means that you have no real oversight of the management and operation of the Fund, and of the performance of the Fund, which really means that the only person performing that function is the minister,” Dr. Singh said.

He said that this is why Vice-President Dr. Bharrat Jagdeo expressed such concern about the over-excessive reach by the minister. The government intends for a board of directors to manage the Fund.

The government also takes issue with the elaborate mechanism used to determine transfers from the Fund, which he described as smokescreens.

To this end, he said: “A very elaborate macro-economic committee is established. That macro-economic committee is expected to recommend an economically sustainable amount and then the Finance Minister determines a fiscally sustainable amount, and then there is an elaborate formula that looks at the economically sustainable amount and the fiscally sustainable amount, looks at benchmark petroleum revenue and looks at production constraints, petroleum revenue — a very elaborate mechanism.”

Dr. Singh pointed out that it is the minister who appoints the committee responsible for determining the economically sustainable amount, as well as himself determining the fiscally sustainable amount.

He said: “When you peel aside all of these elaborate layers, what you have really is a mechanism where the Minister completely controls how much is going to be transferred into the Fund.”

Dr. Singh said too that the structure is elaborate and complicated, so much so that the man in the street cannot understand it. The Inter-American Development Bank has also criticised this feature of the Act.

He said the new formula will be very simple, linking the amount that will be flowing into the Fund in one year and the transfers to the budget in the next year.

Dr. Singh said the government intends to remedy these issues, in addition to establishing a provision which will require the minister to publish, within three months, every deposit into the Fund, and to notify the National Assembly. The minister would be held criminally liable for failure to do so.

LOCAL CONTENT
Putting good local content provisions in place, based on consultations with all stakeholders, mean striking a proper balance between two strikingly opposing viewpoints — those of the industry and those of local non-oil businesses.

While the industry would want the freedom to operate without binding control over their expenditures, Dr. Singh said the domestic non-oil economy rightly wants a large share of the pie from the oil and gas sector.
“In each of those extremities, there are constraints and issues that need to be considered,” he said.

While oil companies may want complete freedom, the senior minister said the government has a responsibility to ensure Guyanese nationals get as much of the business as they possibly can.

The bill puts in place minimum requirements and timeframes for oil companies to meet, in their use of Guyanese goods, services and employees.

“We can’t stipulate percentages that will put the oil companies where it will be impossible to comply, or where they will be buying things where there simply isn’t capacity to supply them,” Dr. Singh said.

Minister of Natural Resources, Vickram Bharrat, had said that though the government’s Bill will set strong targets, they will be realistic.

Dr. Singh said: “We have to take account of domestic capacity to produce the goods and services at a scale that is required, with the level of timeliness, at the level of quality…I think we’ve struck a good balance between ensuring a viable and competitive oil and gas sector, and also ensuring that the level of inputs from the domestic private sector is optimised.”