Sovereign Wealth Fund
…prepared to engage, offer advice
By Samuel Sukhnandan
Guyana’s parliamentary Opposition, the People’s Progressive Party (PPP), has expressed its willingness to assist in discussions surrounding the planning of a Sovereign Wealth Fund (SWF) and the setting up of a body such as a Petroleum Commission that will help to guide the sound management of the impending oil and gas sector in Guyana.
This disclosure was made on Thursday by Opposition Leader Bharrat Jagdeo, who was asked at a press conference whether consideration has been given to this idea, and what level of assistance the Opposition is willing to give. Jagdeo maintained, however, that institutions set up to manage the oil and gas sector must be free of politics.
Jagdeo said he knows of examples where countries rich in oil resources and exporting millions of barrels earn miniscule finances because they have treated the sector in a political fashion. He said he doesn’t want this for Guyana, because the people should be able to feel the real benefits of the sector.
“If it is treated in an apolotical manner, then our country will make long-term progress. We will be able to really translate the barrels export and revenue earned to real development for our people. But it has to be treated in that manner if we are to see some progress,” he maintained.
The former Head of State noted that this has been the message of the PPP even before the 2015 elections. He said that message was reinforced when he called for the (Petroleum) Commission to be apolitical and made up of purely technical people. He still believes it must be free of ministerial interference, and he said he would support a two-thirds vote, so no party can change it.
Jagdeo detailed how his party would want to see the SWF operate. According to him, the first approach would be to define all the sectors that should benefit from the resources; define the investment policy for the fund, and then decide what conditions could trigger a release from the SWF to the Treasury.
“You then have an independent assessment that those conditions are met, and once they are met, you have a report with a request for money to be transferred to the Treasury. Go to Parliament, debate it, and then the money gets transferred and it get spent on the sectors you want it spent on,” he explained.
Shifting his attention to another issue relating to the oil sector, Jagdeo said the Cabinet caucus with international experts about the petroleum sector is just another public relations show. He urged the coalition to engage more with its own people in formulating a plan for the sector.
The high-level meeting Jagdeo referred to was held on Wednesday at State House, and members of Cabinet talked with international experts on developing a strategy for the country’s oil and gas sector. The expert group included Sir Paul Collier, a Professor at Blavatnik School of Public Policy at the University of Oxford, among other academics and experts from across the world.
While he acknowledged that the international advice is good, the Opposition Leader called for the Government to interact more with the local experts and civil society. “They haven’t seen it fit to include the Opposition. They haven’t seen it fit to engage civil society in a manner that will address their concerns,” he said, while explaining that Government does not even have to formally engage the PPP.
“Even if the people bring the best practices from around the world and speak to this Cabinet about it, there is no guarantee that they will implement any of those things, because they have been given world-class advice prior to this and until now they have ignored it. It’s absolutely no guarantee. It’s a show. They just parading the people to say they are doing something about the sector,” he observed.
While citing some comments made by President David Granger at the caucus, the Opposition Leader said he is taken a back by the comment, especially in light of the fact that the President had promised a Petroleum Commission, an SWF and other promises related to the oil sector, which are still to be delivered.
“This framework should have already been in place. And that is why they were so upset when the United States (US) Ambassador (Perry Holloway) said when are you going to start working on the SWF? Because that’s the key thing. So now he is talking about that, the President woke up a week ago, organised this, and realised that we need an organisation and structure to manage the resources,” he stated.
The Opposition, he said, feels that the Government is dragging its feet on the issue, and needs to start making moves to prepare now for first oil in 2020. Jagdeo said the issue is not about rushing the process, but taking all the necessary steps to prepare for an industry that could bring enormous benefits to Guyana and all Guyanese, something that is needed and will be welcomed.
