Home News $424.1M allocated for oil and gas preparations
2019 Budget plans
– millions set aside for capacity building, vehicles and scholarships
A burning question has been what preparations Government would make for oil and gas in its penultimate budget? It turns out a total of $333.2 million in capital funds has been allocated by the Government for petroleum and energy management.
The 2019 Budget estimates also detail that current expenditure, which among other things will go towards employment and other recurrent costs, was $90.9 million. Specifically, wages and salaries are expected to cost the Treasury $20.5 million.
According to the budget estimates, however, only three positions are currently filled in the Department of Energy. In addition, the estimates show that all these employees are employed on a contractual basis.
$43.3 million is earmarked for ‘other goods and services purchased’. Under this heading, $30.3 million will be spent on security services, while $5 million will be spent on training that includes scholarships. Under a heading named ‘other’, a sum of $12 million is earmarked.
Meanwhile, $100 million is earmarked for building expenses; $200 million for institutional support for the oil and gas sector; $28 million for purchasing vehicles and the remainder for the purchase of furniture and equipment.
Preparation for oil
With little over a year to go before first oil, Government has been criticised for the slow pace of preparation. For instance, critical measures like a national oil spill strategy; a constitutional agency to regulate the sector; a national oil company, a local content policy and a Sovereign Wealth Fund are either still in the planning stages or have only been discussed.
This does not include several worrying fiscal indicators, which have caused audit firm Ram and McRae to project reduced earnings from first oil for Guyana if these trends are allowed to continue.
One such trend is the Government’s fiscal deficit, a case where monies are sourced more from loans than from revenue. According to the firm in its Budget focus, Guyana risks less money going towards the Natural Resources Fund and more going towards making up for the deficit.
“The danger of deficit financing is that all things being equal, oil revenues for the early years after first oil will simply go to bridging the deficit and little left for investments and savings,” the firm noted.
At a recent event hosted by the Georgetown Chambers of Commerce and Industry (GCCI), Opposition Leader Bharrat Jagdeo had warned that earnings from oil and gas in the first few years may fall short of the “rosy picture” being painted by the Government.
He had even posited that Government may not even get the chance to use the earnings from oil revenues as they see fit, on account of the debt racked up from domestic borrowing.
Soon after this, however, Minister of State Joseph Harmon was quoted disputing this prognosis.