CGX extension, NRF Bill to be reviewed by a PPP govt – Jagdeo

In keeping with promises to review all deals and agreements entered into by the Coalition Government during the period when it should be acting in a caretaker role, Opposition Leader Bharrat Jagdeo on Thursday said among the things that will be repealed is the recent extension given to CGX Energy Inc. for exploration activities.

Back in May, government had approved a Strategic Joint Venture between CGX Energy Inc. and Frontera Energy Corporation to farm into two shallow water offshore Petroleum Prospecting Licences for the Corentyne and Demerara Blocks – both of which are adjacent to ExxonMobil’s Stabroek Block, where 13 discoveries have been made thus far.
The farm-in joint venture allows Frontera to acquire a 33.333 per cent working interest in the two blocks.
The agreement will see CGX’s Utakwaaka well drilled by November 27, 2019 in the Corentyne Block, with an additional exploration well to be drilled by November 27, 2022. In the Demerara Block, an exploration well will have to be drilled by February 12, 2021, with a further exploration well being drilled by February 12, 2023.
The Opposition Leader told reporters on Thursday that this extension granted by the APNU+AFC government would be reviewed.
“The extension of the CGX contract, we will not treat it as valid. Nothing in that period (is valid)… The Government doesn’t have the authority to extend anything,” Jagdeo contended.
In fact, Jagdeo noted that even the Natural Resources Fund (NRF) Bill which was passed in the National Assembly back in January of this year in the absence of the Parliamentary Opposition will also be repealed.
The NRF Bill is a crucial piece of legislation that is intended to create a framework for saving and investing revenue from Guyana’s oil and gas sector. But the Opposition Leader pointed out that the Government delayed its passage for months, and then went ahead to pass it shortly after a no-confidence vote against Government.
“As far as we’re concerned, it is illegal too…and we will repeal it and replace it (in) a very short period with another model that reflects some of the principles we’ve outlined and some we will outline in our Manifesto,” he noted.
According to Jagdeo, the People’s Progressive Party (PPP) Sovereign Wealth Fund (SWF) will encompass the Santiago Principle on Transparency and Norwegian type-management, which will see the management of the Fund placed at a distance from the politicians.
“As production takes place, the money could be placed in an escrow account and central bank, and nobody touches it. We publish how much money we received, and the money is there,” he stated.
The Opposition Leader went on to outline that, upon examination of the NRF, it will show that the Finance Minister is overall in charge of the Fund; the Central Bank, which reports to the Minister, is in charge of the operation of the Fund; the Minister will name a Macro-Economic Committee that is advisory to him, and that his Ministry chairs, and that will determine the economically feasible amount to be withdrawn from the fund; the Minister will also name an Investment Committee which will again be advisory to him and set up the investment mandate; and then the Minister, in his personal capacity, will determine the fiscally sustainable sum to withdraw.
“What is common in every one of those five issues is the Minister. That’s the management structure of the Fund, and you cannot have that. It’s a recipe for disaster. We’ll destroy the economy and we’ll have a ton of corruption if you do that. You have to distance the politicians from that… So the model that they pass is a model that we have no faith in. It destroys some fundamental principles of how you manage any windfall resource,” Jagdeo, an economist and former President, stated.
According to the Opposition Leader, should the PPP get into office, repeal of the SWF will be done immediately, without any disturbances to oil production activities which the United States oil giant ExxonMobil is scheduled to commence in the first quarter of next year.
The former Head of State criticised the Coalition Government for not realising its responsibility with a sense of urgency of the situation, and with an understanding of its mandate to protect the nation and its people.
“There is no understanding of the seriousness of the issue, and there is an abdication of their responsibility to protect us and our nation. And when you have that, the companies can run amok. So the idea is not to stop production, but to make sure that we build those capabilities…. We want to offer that the PPP will be that sort of government that will do all of those things,” Jagdeo asserted.