The Government has made its third withdrawal for the year, of US$207.6 million (G$43 billion) in oil funds from the Natural Resource Fund (NRF), which will go towards financing Guyana’s national development plans.
The announcement was made by Finance Minister, Dr Ashni Singh, on Wednesday. He said that the withdrawal from the NRF was in accordance with the strengthened legal architecture of NRF Act 2021. The money has been transferred to the Consolidated Fund, in accordance with Section 16 of the NRF Act 2021, as was the case with the other two withdrawals this year.
Finance Minister Dr Ashni Singh
“It would be recalled that in May and July of this year, the Government made withdrawals totalling US$400 million equivalent to G$83 billion. This brings the accumulated withdrawals from the NRF for the year 2022 to US$607.6 million, equivalent to G$126 billion, in line with approved amount in the 2022 Budget.
“The NRF Act 2021 came into operation on January 1, 2022, and as part of the Budget 2022 process, parliamentary approval was granted for a total of US$607.6 million to be transferred during fiscal year 2022,” a statement from the Finance Ministry said.
The International Monetary Fund (IMF) Article IV Mission Report, which was released in September 2022, had commended the People’s Progressive Party/Civic (PPP/C) Government on the amendments made to the NRF Act.
“The NRF Act was strengthened recently. After a thorough review, and while restraining the spending of the oil receipts, the authorities amended the NRF Act in December 2021. The recent amendments set clear ceilings on withdrawals from the Fund for budgetary spending,” the IMF had said.
Meanwhile, the Finance Ministry assured that the PPP/C Government would continue to work aggressively through “sound and transformative investments of oil resources from the NRF”, and further noted that these resources would be used in a clear and transparent manner, to the benefit of present and future generations.
The NRF, which contains revenue received from Guyana’s profit oil, as well as royalty payments and interest earned, had a balance of almost $290.1 billion as of November 30, 2022. This was according to the monthly financial statements, which were released by the Bank of Guyana.
A breakdown of this amount had showed that the Fund received $36.9 billion in profit oil payments for that month. Meanwhile, its total investment income had been $860.3 million at that time.
Funds
The funds from the NRF have their origins in the Stabroek Block – the only block currently producing oil. The Block is 6.6 million acres (26,800 square kilometres). Exxon, through its local affiliate Esso Exploration and Production Guyana Ltd (EEPGL), is the operator and holds 45 per cent interest in the block. Hess Guyana Exploration Ltd holds 30 per cent interest and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
The company is currently undertaking four production projects – Liza 1, Liza 2, Payara, and Yellowtail – in the oil-rich block. It is estimated that when the Yellowtail development project comes on stream, production will climb to 810,000 barrels per day (bpd) by 2027. The US oil major anticipates at least six Floating Production, Storage and Offloading (FPSO) vessels in operation by 2030.
Section 3 (1) of the NRF Act 2021, Act No 19 of 2021, which was assented to by President Dr Irfaan Ali on December 30, 2021, establishes the NRF to manage the natural resource wealth of Guyana for the present and future benefit of the people in an effective and efficient manner and in accordance with the principles of good governance, transparency, accountability, and international best practices, including the Santiago Principles.
Section 5 (1) of the Act provides for a Board of Directors of the Fund comprising not less than three and not more than five members, who shall be appointed by the President, inclusive of a Chairperson. In accordance with Section 5 (2), these Directors are to be selected from persons who have wide experience in legal, financial, business, or administrative matters, one of whom shall be nominated by the National Assembly and one of whom shall be a representative of the Private Sector.
The Public Accountability and Oversight Committee will be chaired by former Commissioner General of the Guyana Revenue Authority (GRA), Clement Sealey. The other six members are Wendell Jeffrey, Abu Zaman, Ryan Alexander, Dawn Gardener, Teni Housty, and Aslim Singh.
The Investment Committee follows a makeup of seven members who will advise the NRF Board on matters that concern investing the oil funds, in a way that maximises the benefits to Guyana.
Chairperson Shaleeza Shaw was sworn in with members Michael Monroe and Richard Rambarran. The other four members will be sworn in at a later date. Government is also awaiting a nomination from Opposition Leader Aubrey Norton, who has been engaged via correspondence.
This Committee must comprise a nominee of the Minister to serve as Chairperson, a nominee of the Minister responsible for the petroleum sector, a nominee from the Attorney General, a nominee of the Opposition Leader, a nominee of the Private Sector and two ex-officio non-voting members. President Ali has previously pointed out that they were awaiting the nomination from Opposition Leader Norton. (G3)
