Govt must insulate Wealth Fund from political influence – former T&T Minister
The Guyana Oil and Gas Association hosted its first lecture in a planned series on best practices to develop an oil wealth management framework, at the Savannah Suite, Pegasus, on Thursday evening.
Former Trinidad and Tobago Energy Minister Kevin Ramnarine, was the featured speaker at the event, which was attended by other Government officials, as he
Former T&T Energy Minister Kevin Ramnarine
made key recommendations on how Guyana could optimise results from its blossoming oil and gas sector.
Touching on Guyana’s Sovereign Wealth Fund (SWF), Ramnarine stressed the importance of keeping it insulated from political interference and also establishing safeguards, including legislative, in order to ensure that the Funds’ contents are not extracted at will.
Ramnarine spoke about the importance of the SWF Fund in averting Dutch Disease. This is the term given to a situation whereby a boost in a country’s foreign currency revenues from one sector can lead to the decline in the country’s other sectors.
The gathering in the Savannah Suite of Pegasus
“It has to be independently managed and insulated from politics. In Trinidad we have been able to do that. The board of the Heritage and Stabilisation Fund is appointed by the President of the country, but the President is acting on the advice of the Minister of Finance,” Ramnarine said.
State companies
Ramnarine also pointed to the importance of the creation of a flagship national oil company, also free from politics. He stated that acts such as nepotism can creep in when this is not catered for. Ramnarine was asked, however, about the methodology used in Trinidad to keep such ventures free of political interference and he acknowledged that this still remained a challenge.
“I think that the methodology for appointing the boards has to change,” he said. “We had a (consultant) doing some work for us, and I asked them to tell me how Statoil (a Norwegian-based national oil company) appoints their board. Statoil’s board is appointed from different sources.”
On the discovery announced on Thursday by ExxonMobil of further oil reserves in its Payara-1 well, Ramnarine was optimistic of its value to the Government. He stated that this latest in oil discoveries has further de-risked oil exploration in Guyana and puts the Government in a much stronger position than ever before, when negotiating terms with oil companies.
Last year, Natural Resources Minister Raphael Trotman and Finance Minister Winston Jordan, spent time in Uganda in order to examine that country’s wealth fund model. In addition, the Extractive Industries Transparency Index (EITI) has been holding consultations in Guyana regarding building a framework to manage Guyana’s burgeoning oil and gas sector.
It is anticipated that if managed correctly, the revenue generated by oil and gas will boost Guyana’s standard of living. Esso Exploration and Production Guyana Limited, an ExxonMobil affiliate, is the company responsible for drilling in the Stabroek Block off Guyana’s shores.
Oil has already discovered in three other wells – the Liza 1, 2 and 3 – in addition to the Payara- 1 well.
