Parliament yet to sharpen skills to scrutinize oil sector

Sep 30, 2018 News

Chartered Accountant, Chris Ram

By Kiana Wilburg
Parliament—the organ that will have a significant role to play in scrutinizing how the oil money is spent—has made zero moves to prepare itself for the petroleum industry.
This was confirmed on Friday with Clerk of the National Assembly, Sherlock Isaacs. He told Kaieteur News however, that when the House returns from recess next month, there will be a meeting on this matter.
Isaacs said, “Most of my officers are on leave. They all should resume by the end of recess. And at our first meeting of senior staff, the matter is on the agenda for discussion; how we are going to train Members of Parliament (MPs) and train staff; if we will bring in people in the area of financial scrutiny to train staff and MPs together.
“After discussing this matter with my staff, I will then move to the Speaker and then to the Parliament Management Committee. But it is on the agenda for discussion.”
He said, too, that the possibility of having a special committee just for oil will also be examined.
SCRUTINY NEEDED
International Organizations like the Natural Resource Governance Institute (NRGI) have lamented on several occasions, that Guyana’s Parliament

WPA Executive Member, Dr. David Hinds

needs to ensure that there is strict oversight of the oil and gas sector. (NRGI is an independent nonprofit organization dedicated to improving countries’ governance over their natural resources.)
The Institute stressed in one of its briefings that the role of Parliament is crucial to ensuring the country’s oil revenue can be accounted for. It warned that “the failure of Parliaments to prepare for good governance of the petroleum sector can have far-reaching implications for the economy, social development and political stability.”
The Institute said that when there is good governance of the oil sector, national wealth increases, there is sustainable development and the people enjoy some sense of stability. NRGI said that these benefits are more likely to be achieved if all MPs share an understanding of what good governance requires in practice and that they are trained and equipped with all the tools to get the job done.
On this note, NRGI said that parliamentarians stressed that MPs need to exercise their oversight role to ensure that good deals are made in the extractive sector.
NRGI said, “Through their oversight role, parliamentarians can ensure that all legislation affecting the fiscal elements of oil, gas and mining projects are coherent. Some countries have wrestled with inconsistencies between pieces of legislation.
“For example, mining laws and investment promotion laws might each spell out distinct incentives, which together may give away far too much or result in a lack of clarity as to which incentives apply.”
In the interest of transparency and accountability, the Organization noted that opposition parliamentarians have a duty to ask the government to

Clerk of the National Assembly, Sherlock Isaacs

provide revenue projections over the life of any major project— particularly when special fiscal exemptions or incentives are granted.
It also said that the Opposition MPs should request via the House, a detailed listing of all assumptions (prices, costs, etc.) upon which these projections are based.
The Institute asserted, “Over time, legislators should request regular reporting of revenues the State receives and compare them against these projections.”
NRGI stated, too, that there should also be a request for disclosure of all contracts with companies in Parliament. It said that this is pertinent so that parliamentarians can access information about deals, including all the exemptions and incentives offered to companies that may deviate from those contained in generally applicable law.
CRITICS AGREE
Local critics have also expressed the opinion that the oil and gas sector will require strong oversight from the Parliament.
Chartered Accountant, Chris Ram, has said that the ExxonMobil agreement should have been tabled and approved in the National Assembly. He said that this should have been the way forward for all Production Sharing Agreements.
“These contracts have long term effects, so what you have is a Minister binding a Parliament or a country for decades. The practice of having

Speaker of the National Assembly, Dr. Barton Scotland

Production Sharing Agreements go through the Parliamentary process can be seen in places like Tanzania, Ghana and Nigeria. That is how it should be done, because there are long term effects with these contracts…”
The Chartered Accountant said, “What we have before us is proof that this is what should be done. But in addition, I think even the scheme in which the Executive negotiates should be revised…”
Executive Member of the Working People’s Alliance (WPA), Dr. David Hinds is also in agreement with Ram’s points.
Dr. Hinds noted that the oil and gas sector is a defining one and as such, he would recommend that Parliament set up a standing committee on energy.
He said that such oversight is necessary, given how much is at stake. Perhaps as a start, the University Professor said, there should be a selected committee to look at what has transpired thus far in relation to the contract and other related issues.
He emphasized that such a committee should hold hearings, so that it gets to hear from government operatives and other expert witnesses.