“Refining” of World Bank capacity building loan “almost complete”

Jul 12, 2022 News

– Natural Resource minister

Kaieteur News – Natural Resources Minister Vickram Bharrat has confirmed that work is ongoing to “refine” the US$20M World Bank loan that was secured in 2019 to build capacity within the nascent oil and gas sector.

Natural Resource Minister Vickram Bharrat

The Natural Resource Minister did not give a time line but he told the newspaper that work should be completed soon as the relevant agents are actively engaged in bringing the scope of the project in line with the new government’s vision. “We do have the loan from the World Bank and we were doing some changes; restructuring as we would have mentioned; that is almost completed.” the minister informed. He continued: “We are engaging the World Bank throughout the entire process so they are on par as to what we are doing and what our priorities are and what we want to achieve from the funds that are available there.” While the Minister did not expound on what the new vision would look like for the funds, he did say that the ministry’s permanent secretary and petroleum team are almost in weekly contact with the World Bank representatives. “So I know they are in conversation with restructuring which is almost completed.”

Finance Minister Ashni Singh told Kaieteur News that the Natural Resource ministry is the point agency on the World Bank loan and that they are making the adjustments to suit the sector’s agenda. When that is done, the information would be transferred to the Finance Ministry for its final look before taking the document further.

The World Bank Guyana Petroleum Resources Governance and Management Project (GPRGMP) loan became a topical issue since its funds had not been accessed since 2019, despite the purpose of the money being to strengthen Guyana’s capacity in managing and overseeing its new oil and gas sector. The World Bank has so far downgraded Guyana’s score on the loan and the implementation of its components from ‘Moderately satisfactory’ to ‘Moderately Unsatisfactory’.

The unused US$20M World Bank loan which seeks to enhance Guyana’s ability to manage its oil and gas sector supports among other things, two key areas aimed at protecting oil and gas revenue; cost audits and economic and fiscal modeling that oversees various funds generated from the lucrative sector. The loan is set to enhance legal and institutional frameworks as well as strengthening the capacity of key institutions to manage the oil and gas sector. The document speaks to providing support and international experts to provide hands on training for the Department of Energy, the Petroleum Commission, Guyana Geology and Mines Commission, Ministry of Finance and the Guyana Revenue Authority among others. The training also includes capacity building to monitor, regulate, and review, studies on reservoir engineering and geology which would provide the government with independent third-party technical expertise needed to analyze estimates of Guyana’s oil and gas resources. Economic and fiscal modeling to help forecast oil and gas revenues, support revenue administration and taxation, and evaluate options for future modifications to Guyana’s oil and gas fiscal regime as well as contribute to supporting the cost audit of existing Production Sharing Agreements.

The failure to use the funds has led some concerned parties to believe that Guyana remains financially vulnerable to the oil companies drawing back billions of dollars in cost oil and profit from the oil resource harnessed here. Because the World Bank loan also offers training on handling oil and gas related environmental matters, the argument is that Guyana remains environmentally and financially unprotected.