Guyana could tap into US$267M oil revenues to help fund massive transformation– VP Jagdeo

…assures it will be done with transparency, through National Assembly

…process underway to have review, repeal the coalition’s NRF Act – AG Nandlall

With over US$267 million in oil revenue earnings currently in the Natural Resource Fund (NRF) at the New York Federal Reserve Bank, Guyana could soon access these monies as the need arises given the massive economical transformation the country is undergoing.

This is according to Vice President, Dr Bharrat Jagdeo, during a recent interview.

Vice President Bharrat Jagdeo

“All the money, so far, from the sale oil and from the royalties have gone into the [Natural Resource] Fund. We have not used any money since we got into office from there. There may be need to use the resources in the near future,” Jagdeo posited in response to a question on when Guyana will access the monies in the overseas account.

Earlier this month, the Natural Resources Ministry disclosed that on February 5, 2021, some 997,420 barrels of oil were lifted from Liza Destiny. A sum of US$61 million was paid for that lift.

It was noted that to date, a total of 5,009,797 barrels of oil worth US$246.5 million have been lifted. This sum, added to the royalties the country receives, takes the total in the NRF account to US$267.6 million.

Guyana received its first payment of US$54.9 million for an oil lift dated February 19, 2020. The second lift on May 21, 2020, was valued at US$35 million; while the third lift, which occurred on August 9, 2020, was worth US$46 million. The fourth lift of oil offshore Guyana occurred on December 9, 2020, and came in at US$49.4 million in value.

United States oil giant ExxonMobil as operator, began producing oil on December 20, 2019, in the Stabroek Block. Guyana’s oil revenues are being banked in the New York Federal Reserve, where it is earning interest.

Previously, President Dr Irfaan Ali had said that Guyana’s oil and gas resources would play a critical role in its development, with a portion of the money going towards the development of world-class education, human capacity and healthcare system; reducing energy costs and enhancing the local infrastructure to benefit Guyanese.

Transparent process

However, during the online broadcast, Jagdeo reassured that whenever the time comes for Government to access the oil revenues offshore, it will be done in a transparent process, whereby the money will be transferred to the Consolidated Fund and debated in the National Assembly.

“The projects for which the monies [will be] used will be debated in Parliament,” he asserted.

While he believes that monies earned from any resource windfall should be saved for inter-generational equity particularly to avoid the Dutch Disease, the Vice President noted that all the revenues cannot be reserved in Guyana’s case now.

“We can’t be saving too much for inter-generational equity now when we have so many pressing needs and so many people who are poor, who need a place to live in, who don’t have good potable water, who need better quality healthcare, and where we have to get education to world-class level. We need to invest our monies in these areas too, as well as other sectors of our economy so that when the oil is gone, we still have a booming economy unlike the other countries,” he stressed.

However, the Vice President went on to reiterate his Government’s concerns with the current model of the NRF that was put in place by the previous APNU/AFC regime.

“There is a formula there about how the money should be transferred to Government but the formula is archaic… Apart from the fact that we don’t believe it’s arm’s length enough from the Government and can be subjected to the control of the [Natural Resources] Minister – almost total control – who determines the fiscally sustainable sum, he would set up investments, committee controls, the Central Bank. [With the coalition model] the Minister dominates the Fund when it should be a bit more technically managed so that you don’t have political interference in its use. And that is why so many people like the Norwegian Model because it emphasises this independence from the Government,” Jagdeo outlined.

This has been the position of the People’s Progressive Party/Civic (PPP/C) since it was in Opposition.

The NRF Act was passed in the National Assembly after the APNU/AFC Government was toppled by the passage of a No-Confidence Motion (NCM) on December 21, 2018, and it was supposed to be operating in a caretaker mode.

Reviewing NRF Act

At the time, the PPP/C had made it clear that if it gets into office – which it eventually did last year after a tumultuous and prolonged 2020 elections that lasted five months – the party would repeal the coalition’s NRF and amend it to reflect its own position, which is that the Fund should be managed sustainably and at arm’s length from Government and politicians. In fact, this is one of the any promises the party made in its manifesto.

“So, we are working now to change the legislation and the Fund, whenever there is a budgetary gap or there is a project that needs funding, and we make a decision that will we access the Fund, we will do so transparently,” the VP contended.

In fact, Attorney General and Legal Affairs Minister Anil Nandlall told Guyana Times on Sunday that Government is now on the hunt for a law firm to help with reviewing the NRF legislation.

“A contract is out right now for consultancy, for a law firm to be retained to work with the Government, the Ministry of Natural Resources and the Attorney General Chambers on a number of issues relating to the oil and gas sector including drafting of legislations and reviewing the existing legislation… The contract has been advertised under the Procurement Act and it is out now for tendering,” Nandlall stated.

Government had previously committed to have the restructuring of the NRF Act before the end of 2021.