The cart is being put before the horse

Jan 07, 2021 Features / Columnists, Peeping Tom

Kaieteur News – The social media site, OilNow, reported that the Minister of Natural Resources told the National Assembly that the Department of Energy will be converted into a professional technical unit to manage the oil sector and that the Petroleum Department at the Geology and Mines Commission (GGMC) will be subsumed into the Petroleum Commission.
The startling revelation received very little comment after it was made. But it highlights the utter confusion which exists under the PPP/C when it comes to the oil and gas sector.
In August of last year, Vice President Bharrat Jagdeo virtually said the same thing. He also said that the Petroleum Commission will be appointed in six months. Well, in six months a lot of things can happen.
A lot of things have happened already. A dubious review of the Payara Field Development Plan was done and is being treated as a top-secret. Payara has been approved by the government. Exxon has begun drilling in the Canje Block. Yet, the government cannot find the time to publish the Order bringing the Petroleum Commission into being.
A Petroleum Commission Bill was passed by the Coalition Government. The Bill provides for the Minister responsible for oil and gas to bring into being a Petroleum Commission.
It was ill-advised of the APNU+AFC to conceive a Commission that has regulatory powers as well as the authority to execute policies and to advise the Minister at the same time. In the Natural Resources sector, international best practices suggest that it is conflicting to have one body as regulatory authority, the policy-making authority and the implementation arm.
The PPP/C wants the Petroleum Commission to subsume the functions of the Department of Energy and the oil and gas aspects of the work of the Ministry of Natural Resources. The functions of the Petroleum Commission are akin to the Public Utilities Commission being part of the Ministry of Telecommunications. It cannot be expected to monitor itself.
But this is exactly what the Petroleum Commission envisages. According to the law, the Commission will be required “to monitor and regulate the efficient, safe, effective and environmentally responsible exploration, development and production of petroleum in Guyana.” However, the law goes on to extend these functions of the Commission beyond regulation and monitoring.
According to the Petroleum Commission Act, the Petroleum Commission also has an advisory and operational role. It is expected to advise the Minister and to promote the policies of the government. It therefore cannot be deemed an independent regulator. It is also expected to execute the decisions of the government and to ensure compliance with the conditions.
And judging from the statements reportedly made by the Minister of Natural Resources, the government has no intention of separating these functions. Like the APNU+AFC, the PPP/C government wants to place the Commission under its thumb.
This is at odds with the advice which was rendered three years ago by the former Minister of Energy and Energy Affairs of Trinidad and Tobago, Kevin Ramnarine. He has urged that the Commission be separate from the Ministry of Natural Resources.
Five months into office, the PPP/C is still twiddling its thumbs on the question of the Commission. It has not yet brought any legislation to revise the obnoxious Petroleum Commission Act, and even if it does, it is not likely to slacken its grip on the control it intends to exercise over the Commission.
The PPP/C is yet to bring the Commission into being. And it is likely to exercise maximum delay in doing so. It says that it will bring a revised Petroleum Commission Bill but interestingly wants to do this after it develops a Local Content Law. This is putting the cart before the horse because it is the Commission which will have to oversee the Local Content Law.
The absence of the Petroleum Commission gives the PPP/C free rein to grant permits, and without the regulatory oversight. The PPP/C’s game is clear – control, control, control. Without the Commission the PPP/C can do as it pleases.
Without a Commission, there is no pressure to develop a Depletion Policy. And without a Depletion Policy, those who have interests in the Canje and Kaieteur blocks will be more secured because they know that they have a government in place which will not limit the rate of oil production. And this will be to their advantage in selling buy-in rights to their blocks. The lack of Depletion Policy effectively helps the owners of the blocks to make a fortune for an asset for which no signing bonus was paid.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)