Jagdeo says too much “gyaff” about Sovereign Wealth Fund

Oil and gas sector

The slow pace at which Government is moving to set up a Sovereign Wealth Fund (SWF) for the oil and gas sector has not gone unnoticed. Opposition Leader Bharrat Jagdeo has said that two years are more than enough time for the coalition Government to have already set up this fund.

Jagdeo feels the administration is making the issue very complex when in fact it is nothing close to that. “If they give me one lawyer — or they don’t even need to do that — I could create a model of an SWF within a month, with some of the strongest principles for separation (of the fund) from political people; (for) investment decisions (in regard to) the fund; and (for) access to the fund,” he has expressed.
The former Guyanese Head of State affirmed that his model of a SWF would work well for Guyana because it would not allow for any loopholes that could possibly destroy other sectors.
“There is too much gyaff…,” he said at a recent press conference, adding that the infrastructure being created for the Petroleum Commission is being done in a manner that would give its control to a minister of Government.
A Sovereign Wealth Fund (SWF) is a state-owned investment fund that is made up of surpluses from official foreign currency operations, proceeds of privatisations, governmental transfer payments, fiscal surpluses, and/or receipts resulting from resource exports. Money from the SWF can be used for investment purposes, to benefit the country’s economy and citizens.
Guyana’s SWF Bill was drafted by the Commonwealth Secretariat with input from the Government, and was presented to Natural Resources Minister Raphael Trotman last December.
Meanwhile, some legal minds have recently expressed concern over the fact that Guyana’s Judiciary may not be prepared to handle complex matters relating to this new sector. Jagdeo has acknowledged that it may be difficult for the local judiciary to handle many matters in relation to oil, but said if plans are put in place to build capacity now, this may no longer pose a challenge in 2020.
“So we have to build capacity there. I would hope (that) eventually (we) will have a more specialised court, like a commercial court, that can deal in a swifter manner with some of these cases; and (that we) will have a couple of judges who will build capacity to deal with the issues with oil and gas,” he added.
Jagdeo has also challenged statements about the People’s Progressive Party/Civic (PPP/C) Administration not setting a solid groundwork for the oil and gas sector. He said that during the PPP/C leadership of the country, several challenges were faced in relation to the oil and gas sector, one of which was the border controversy between Guyana and Suriname, which was brought to international spotlight.
He said, “We lost almost 10 years of exploration and drilling because we had to invoke this clause in the compulsory arbitration on the International Convention on the Law of the Sea. We had to go to court and we spent lots of money, but the outcome was good for Guyana.”
The Opposition Leader has said that while the PPP/C Administration was prepared to make quick decisions based on the oil sector, it was not prepared to repeat what had been done at the Guyana Geology and Mines Commission (GGMC), where a hydro power unit was set up but never functioned fully. “A hydro power division was created and a lot of people were hired, and we never produced a single kilowatt, except for Moco-Moco. We didn’t want to do that again — build a large petroleum unit over there and then sit around and wait for oil to be found, (when) you never knew that would happen,” he explained.
One well, drilled in October 2016, has been described by ExxonMobil as a world-class resource discovery, with potential expressed to be in excess of one billion oil-equivalent barrels. This find could earn Guyana billions of dollars in tax revenues.
In preparation for oil production by 2020, Government has been drafting new legislation and updating existing legislation to govern the oil and gas sector.