No wholesale copying: Revised oil fund to include best aspects of several models

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There will be no wholesale copying of another country’s Sovereign Wealth Fund (SWF) model to manage the massive revenues being accumulated from local oil and gas development. Instead, Guyana’s oil fund is expected to reflect the best aspects of various existing models.

This was recently highlighted by the Senior Minister within the Office of the President with responsibility for Finance Dr. Ashni Singh.

The PPP/C government has committed to amending the country’s Natural Resource Fund (NRF) Act. The NRF is Guyana’s oil fund that is meant to manage how the country’s oil wealth will be saved and spent.

With these amendments being brought to the National Assembly later this month, Dr. Singh pointed out that Guyana has benefitted from significant exposure to the establishment and management of oil funds in various countries.

Senior Minister in the Office of the President with Responsibility for Finance, Dr. Ashni Singh

And, in an invited comment Dr. Singh posited, “The amendments that we are going to be proposing will reflect the cumulative accumulation of this international experience.”

Earlier this year, during Guyana’s inaugural diaspora engagement conference, President Dr. Irfaan Ali related that Guyana was examining both the Norwegian and Kazakhstan models.

Importantly, however, he pointed out that the exact model used would be determined by Guyana’s developmental needs- including the major infrastructural works needed.

The Senior Minister also emphasised that the model being crafted is one that is “suitably customised” to the Guyanese circumstances.

“…We want to make sure that we derive the advantages of all of the good models that are out there and avoid all of the pitfalls of the models that are out there,” Dr. Singh said.

Importantly, Vice President Dr. Bharrat Jagdeo recently announced that the proposed amendments to the NRF Act include stricter penalties for handling oil monies, with the responsible minister possibly being jailed for 10 years if he/she fails to tell Guyanese about oil monies received.

He also said that the other amendments include revamping the NRF oversight committee which comprises 22 organisations and establishing a Board of Directors that separates the subject Minister and the Management of the Fund.

The current oversight committee, Jagdeo said, is too “cumbersome”.

Guyana currently has about US$534 million (approximately GY $112 billion) in the NRF, kept in the New York Federal Reserve Bank. With the sale of this final oil for the year, that fund could increase to over US$600 million.

The amendments to the NRF Act and the new Local Content legislation are two highly- anticipated pieces of legislation that are being presented to the National Assembly. Both pieces of legislation are crucial to the sound management of Guyana’s nascent oil and gas sector.

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