The small South American country of Guyana is on the verge of receiving big money when oil from the giant Liza field begins flowing in less than two years. However, the extent to which this newfound wealth benefits the nation of around 750,000 people hinges on the establishment of an effective revenue management regime which experts say is pivotal if the country is to avoid the dreaded resource curse.
Authorities in the lone English speaking country on the continent are looking to implement new laws which will enable it to bolster its economy, tackle poverty and meet crucial sustainable development targets.
With the help of the Commonwealth, the Government seems intent on drafting new petroleum legislation which will see it maximizing the benefits of oil production from its vast offshore reserves discovered by US oil major, ExxonMobil.
Revenue from multiple offshore developments, beginning with Liza Phase 1, could help Guyana meet the Sustainable Development Goals agreed by United Nations countries.
Commonwealth Economic Adviser Daniel Wilde in January said, “If used wisely, Guyana’s oil revenue could help it to fundamentally transform its economy and enable it to meet key sustainable development goals. That’s why we have been working closely with the Government to draft new legislation to establish a Sovereign Wealth Fund. Once implemented, the Sovereign Wealth Fund should contribute to economic stabilization, fairly transfer petroleum wealth across generations and maintain economic competitiveness. “
With the assistance of the Commonwealth, the Government is drafting an upstream petroleum policy, in addition to redrafting Guyana’s Petroleum Exploration and Production Act.
The country’s Finance Minister Winston Jordan said at an April 9 press conference in Georgetown that a green paper along with the requisite draft legislation on the Natural Resource Fund – renamed from Sovereign Wealth Fund – will be sent to Cabinet shortly for its examination. Once this is cleared by the Cabinet, Mr. Jordan said it will then be made available to the public “for further discussions, refinements and improvements, then we will hand it over to the Attorney General Chambers and then to the Parliament.”
This will be seen as a welcomed development by Guyanese, who through various civil society groups and business representative bodies, have been pressing for work on the establishment of the fund to be fast-tracked.
Legislation being worked on by Government includes the Petroleum Commission Bill, Natural Resource Fund Bill and Petroleum (exploration and production) Bill. The Petroleum Commission Bill, which will be ready for Parliamentary scrutiny this year, will enable the Ministry of Natural Resources to establish a Petroleum Commission and outlines its responsibilities, duties and powers.
The Commonwealth has said it is committed to further assisting the Guyana Government to ensure the effective regulation of the petroleum industry and that oil revenues are wisely managed for the benefit of current and future generations of Guyanese.