Govt. seeking $26.5B in supplementary funds for low carbon development initiatives

Apr 25, 2023 News

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Kaieteur News – Minister of Parliamentary Affairs and Governance, Gail Teixeira on Monday tabled a financial paper in the National Assembly, seeking supplementary funds to develop low carbon initiatives.

She was at the time presenting on behalf of the Minister with Responsibility for Finance, Dr. Ashni Singh, who was absent from the Sitting.  According to the Financial Paper seen by Kaieteur News, the sum of $26,532,000,000 is being sought from the Ministry of Finance under the Low Carbon Development Programme. It states that the funds will specifically go towards Low Carbon Development Initiatives.

Further, it was also explained that the provision will be financed from the carbon credit inflows. In a separate Financial Paper for Contingency Fund Advances, the Ministry of Amerindian Affairs- Community Development and Empowerment- sought the sum of $4,743,000,000. This sum too will be funded from carbon credits revenue. In fact, the financial document explains that these additional resources meet the 15 percent contribution to Amerindian villages, satellite villages and communities.

The Minister of Parliamentary Affairs said the Financial Paper will be debated at the next Sitting of the National Assembly. It is understood that the proceeds from the sale of carbon credits can be used by the state to finance renewable energy, land titling, repairing canals, and protecting against climate change as outlined in Chapter Three, Four and Five respectively of the Low Carbon Development Strategy (LCDS).

In keeping with the established budgetary process enshrined in law, the Minister of Finance shall request the National Assembly to approve withdrawals from the Consolidated Fund, which shall be included in the Annual Budget Proposal. So far, Guyana has received US$75 million for the sale of its carbon credits to one of the oil companies operating in Guyana, Hess Corporation. This year a total of US$150 million is expected to come in from this market.

Government has committed that 15 percent of the revenue from this sale will go towards Indigenous communities. Overall, those villages will receive approximately US$112M. This year alone, those communities will benefit from around US$22.5 million (GYD$4.7B). Each community has already created separate bank accounts, allowing funds to be accounted for.

In February, Vice President Bharrat Jagdeo during an engagement with Toshaos at the Arthur Chung Conference Centre revealed that each community will be receiving up to $35 million and no less than $10 million. He explained that the disbursement was dependent on the population size and charged that the monies be used to advance the communities to achieve job creation, food security and social welfare, the Department of Public Information reported.

The revenue from the first carbon credits sale have been deposited in a US dollar-denominated account held by the Bank of Guyana overseas, for onward transmission to the Consolidated Fund, which will be credited with the Guyana dollar equivalent.

According to Government, the National Assembly, including its Committees, will have oversight of the investment of all national revenues received from forest climate markets and managed via the Consolidated Fund through the budgetary process, in keeping with the commitments made in the Low Carbon Development Strategy (LCDS) 2030 and Resolution No. 45, adopted by the National Assembly on August 8, 2022.

The deal for the sale of Guyana’s carbon credit was tied with Hess Corporation on December 2, 2022. Hess is Guyana’s first carbon credits customer. These credits were earned by the state for the preservation of the country’s forests.

The company agreed to purchase 30 percent of the carbon credits for a minimum of US$750M. Based on the agreement with Hess Corporation, it will be paying US$15 per tonne between 2016 and 2020, which amounts to US$187M. Meanwhile, during the period 2021 to 2025, Guyana will be earning US$20 per tonne which is expected to rake in another US$250M for the country. For the period 2025 to 2030 Hess will pay US$25 per tonne amounting to US$312M, bringing the total to US$750M over the 10-year period.

Jagdeo in a statement back in January this year announced the first payment from the oil company to the tune of US$75 million. “US$75 million has been paid, and is the first payment in an agreement that will be worth a minimum of US$750 million up to 2030. Two further payments of US$37.5 million each will be made during 2023 – one in January and one in July – bringing the total amount available for appropriation in this year’s National Budget to US$150 million,” Jagdeo said. In the meantime, VP Jagdeo said the government is yet to finalize markets for its remaining carbon credits.

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• carbon credit, funds, initiative, sale, supplementary

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