Aug 10, 2022 News
Kaieteur News – Despite taking an US$11.6M loan from the Inter-American Development Bank (IDB) back in 2018 to strengthen the nation’s governance framework for the oil sector, several objectives were either not achieved, or, in cases where they were, are no longer being utilised by the current administration.
According to an IDB report on the performance of the loan, it was noted that a key goal for the bank was the creation of a development plan for Guyana’s oil and gas sector. Given Guyana’s inexperience in handling such a massive and highly technical sector, that plan was intended to outline what steps ought to be taken to build up institutional capacity. That plan was also intended to guide the country on all the experts it needed along with demarcating how and in what fields Guyana should start training for its people to be in the driver’s seat of managing the industry.
The IDB said too that this is a critical document for the country to be armed with noting that its advice in this regard was premised on the governance and institutional development experiences of other resource-rich countries, even as it recognised that the circumstances of each country are unique, as are industry and market circumstances at any point in time.
The financial institution said Guyana was poised to have a plan that drew from those nations that developed an effective institutional architecture for the governance of their energy resources such as, Brazil, Colombia, and Norway and most recently, Mexico. It reasoned that these and other countries provide lessons and widely recognised best practices which can be considered as orientating experiences and benchmarks for Guyana.
The sectoral plan was also expected to lay out what are the objectives of the government with the oil funds for the benefit of the people of Guyana. It would have also served as the people’s first line of defense on holding the government accountable should it divert from the agreed pace of institutional and economic development with the funds.
Importantly, the bank contended that it is crucial for Guyana to have a development plan for the sector as it would outline what mechanisms are to be implemented and over what time period for the State to sustainably administer its resources, manage risks and opportunities, and incorporate oil revenues into the development and diversification of certain sectors.
In Tuesday’s publication, it was reported that a Depletion Policy Guideline for the oil and gas sector was one of the targets achieved under the loan but the PPP/C Government refused to make use of it. Those guidelines essentially serve to help Guyana independently determine the right pace of oil extraction and development, all the while giving authorities enough time to develop their governance systems.
Government has contended however that Guyana needs to pump all of its oil as fast as possible since the world is moving away from major fossil fuel use by 2050.
OTHER UNDERUTILISED LOANS
This IDB loan is not the first to be underutilised. Kaieteur News previously reported that the PPP/C Government has also placed a US$20M World Bank loan on pause.
That money was approved on March 29, 2019 for the Guyana Petroleum Resources Governance and Management Project (GPRGMP). The programme’s objective is to ensure the enhancement of legal and institutional frameworks and the strengthening of the capacity of key institutions to manage the oil and gas sector.
The financial institution said in a report that the project’s overall implementation has been downgraded to ‘Moderately Unsatisfactory’, with around 24 percent of the total credit disbursed and no disbursement requests received by the Bank since the second quarter of 2021.
The bank in its report said that the government has indicated as recently as late December 2021, its intention to “refine the scope of the project to bring it in line with current government priorities.” That process is still ongoing.
This newspaper also reported that a US$1M grant from the World Bank to strengthen the monitoring capacity of the Environmental Protection Agency (EPA) was also underutilised. This programme had, for example, set the stage for the regulator to be armed with a 34-member unit of oil and gas experts including highly specialised and experienced petroleum, geological and environmental engineers. This, among other objectives under the grant, are yet to materialise.
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