Three years later … Guyana without a single completed policy or modernized legislation for oil sector
Dec 16, 2018 , By Kiana Wilburg, Kaieteur News Online, https://www.kaieteurnewsonline...tion-for-oil-sector/
POLICIES/LEGISLATION NEEDED FOR GUYANA’S OIL SECTOR
STATUS
1. National Oil and Gas (Upstream) policy
Incomplete
2. Local Content Policy
Nearing finalization
3. Modernization of Petroleum Exploration and Production Legislation; and accompanying Regulations
Incomplete
4. Petroleum Commission Bill
Still stuck in Special Select Committee
5. Petroleum Taxation and Fiscal Legislation
Incomplete
6. Sovereign Wealth Fund Legislation
Bill recently tabled in the National Assembly
7. National Oil Spill Response Plan
Incomplete
8. Depletion Policy
Yet to start
9. Beneficial Ownership Policy/Guidelines
Yet to start
10. Modernization of EPA Laws/Regulations
Yet to start
11. Citizenship Participation Fund Legislation
Incomplete
12. Petroleum Health & Safety Regulations
Incomplete
To ensure Guyana is able to transform its oil wealth into a blessing, the coalition administration promised, since 2015, that a number of polices would be developed, and sector specific laws updated and drafted where necessary.
But after three years of making this commitment, not a single policy has been completed or a piece of legislation updated.
Minister of State, Joseph Harmon
Minister of State, Joseph Harmon, had noted some months ago that all matters (inclusive of policy and legislative reviews) relating to the oil sector would be dealt with by the Energy Department which is headed by Dr. Mark Bynoe.
When contacted on the issue at hand, Dr. Bynoe acknowledged that indeed, many of the promised policies are incomplete and it is highly unlikely that this position would change before or on December 31, 2018.
He noted that there are some policies which citizens can expect to be completed for 2019. The Energy Department head said that this is the case with the Local Content Policy. Dr. Bynoe said that the document was the subject of several rounds of consultations. He said it is nearing the final stage and a positive result can be expected in the new fiscal year.
As for the modernization of Environmental Protection Agency’s (EPA) Laws/Regulations, Dr. Bynoe noted that his office is working with the EPA on several matters but before there could be any update to the laws and regulations, a needs assessment will be completed. Dr. Bynoe asserted that a consultant is being hired for this job.
As for the other laws and policies, the Energy Department head said these will be done after the Department conducts a review of the existing legislative framework in an effort to identify the gaps that need to be addressed immediately, in the medium term and in the long term.
This review is currently underway. He opined that with such a review, a more informative approach can be taken to craft the robust primary and supplementary policy and legislative instruments needed for the sector.
The revisions are expected to be completed by the third quarter of 2019.
CHATHAM HOUSE ADVISES
If Guyana intends to be successful with the governance of its oil sector, it must ensure that there are clear oil related policies and systems to ensure accountability of the oil wealth to come.
Energy Dept. Head, Dr. Mark Bynoe
This was recently noted by Chatham House, an international transparency body that helps countries with the governance of their extractive sectors.
The London-based body recommended that policies for the oil and gas sector be guided by a clear vision for the development of the country and a strategic view of how the petroleum sector will deliver that vision.
Speaking to other guidelines, Chatham House warned that the rush to adopt international best practices may not always be appropriate in the case of emerging producers in the oil and gas sector. Instead, Chatham House said that the government should aim for more appropriate practices, taking account of the national context.
Chatham House said, “In order to attract the most qualified oil company to a country with an unproven resource base, the host government can invest in geological data, strengthen its prequalification criteria and ensure transparency. It should also plan for success and anticipate the implications of hydrocarbon discoveries in its tax code, and be robust through declining oil and gas prices.”
As for the aspect of licensing, Chatham House said that this is a key mechanism whereby government can reap early revenues and maximize long-term national benefits. It said that Government must ensure that it simplifies both negotiations and tax structures to mitigate knowledge asymmetries with oil companies.
It said, too, that the government and industry must engage and share information with communities to manage local expectations regarding the petroleum sector and build trust.
“In emerging producers, budgets for local content may be small and timelines for building capacity short. In this context, the focus should be on the potential for repeat use of any local capacity developed.
Additionally, meaningful participation of national organizations in resource development is a central objective of many emerging producers.”
The international body said that once the aforementioned are followed, Guyana would be well on its way to laying a strong foundation for the protection of the oil sector.
