Govt still to determine how to use oil revenues

While it will take about three to four years before Guyana sees any monies flowing from its promising oil reserves, Government is still to decide how it will split the revenues.

Finance Minister Winston Jordan said on Monday that while Government planned to establish a Sovereign Wealth Fund (SWF), it is yet to determine just how the money will be used up.

“We have to really know what we want to do with the money, how much we really want to use now, how much we want to put in the fund and if we want to create situations where, given the vagaries of prices of our commodities, if we want to put in an extra fund for whenever there are slippages in foreign exchange.”

Jordan said there was still some time remaining before Government could put this all together and present it to the public to get their views before taking it to Parliament.

President David Granger, upon assuming office in May last year – the very month ExxonMobil announced the discovery of oil in the Stabroek Block – told <<<Guyana Times>>> that his Government would be putting the revenues garnered from the oil and gas sector, and other natural resources sectors, in a Sovereign Wealth Fund.

Such a fund consists of pools of money derived from a country’s reserves, set aside for investment purposes to benefit the country’s economy and citizens. The funding for a Sovereign Wealth Fund comes from central bank reserves that accumulate as a result of budget and trade surpluses, and from revenue generated from the exports of natural resources.

Jordan said a Sovereign Wealth Fund was dependent on the flow of money, and with oil expected to flow by late 2020 or early 2021, Guyana still have “another three or four years before the Fund gets going”.

Government is also working towards a Petroleum Commission Bill for the National Assembly which will outline the regulations to govern the newly-established Petroleum Commission. Natural Resources Minister Raphael Trotman will table that Bill shortly in the National Assembly.

The establishment of a new regulatory agency would relieve the Guyana Geology and Mines Commission (GGMC) of responsibility in this regard. “We need to reorient our minds towards petroleum, which is a completely different form of mining; and so the idea is that we would move in tandem with the rest of the world and have a separate regulatory agency,” Minister Trotman had said last week.

He added that the Bill has already been extensively shared with stakeholders, including the Opposition and the Natural Resources Ministry has been “working overtime” to create and upgrade legislation to govern the emerging oil and gas sector.

The Commonwealth Secretariat had, in December, drafted a Sovereign Wealth Fund Bill for the country, and Minister Trotman has said that that Bill was now with the Finance Minister, since “it is a financial matter”. The Ministry has also drafted a local content policy.