NRF Bill tabled: Board of Directors to be appointed to manage oil funds
– also includes Oversight and Investment Committees
With the aim of having an arm’s-length approach to revenues earned in the oil and gas sector, the Guyana Government is seeking to establish a five-member Board of Directors to manage the Natural Resource Fund. This committee is expected to be made up of mostly civil society representatives.
This is among the series of proposals contained in the Natural Resources Fund Bill that was presented to the National Assembly on Thursday by Senior Minister with responsibility for Finance, Dr Ashni Singh.
He said the Bill is to intitule an Act “…to establish a National Resource Fund to manage the natural resource wealth of Guyana for the present and future benefit of the people and for the sustainable development of the country, and for connecting matters”.
According to the proposed law, the NRF will be governed by a Board of Directors, comprising as many as five members, to be appointed by the President. The Head of State will also have to appoint a chairperson from that group.
The Director is to be selected from among persons “who have wide experience and ability in legal, financial, business, or administrative matters”.
The Bill provides for the National Assembly to nominate one of the directors, while another one will be a representative of the Private Sector. However, it explicitly states that the directors cannot be a Member of Parliament or anyone whose appointment will be a conflict of interest, among other restrictions.
It was noted too that the Directors will hold the post for not more than two years with eligibility for reappointment, and all appointments, as well as changes in appointments, are to be gazetted and published on the Ministry’s website and in two daily newspapers.
The new Bill states that the Board of Directors will be responsible for the overall management of the Fund, reviewing and approving the policies of the Fund, monitoring the performance of the Fund, ensuring compliance with the approved policies of the Fund, and ensuring that the Fund is managed in compliance with the Act and all other applicable laws.
Moreover, the Board is also expected to report to the subject Minister, who is allowed to give policy directives as deemed necessary to their functions. In addition, the proposed legislation caters for the appointment of two committees, one of which is the Public Accountability and Oversight Committee, which will provide non-Government oversight of the Fund and comprises various civil society representatives, who will have to present a report to the National Assembly annually.
The other committee is an Investment Committee, which will have seven members, including nominees by the Attorney General, the Opposition Leader, and the Private Sector. This body will be responsible for advising the Board of Directors on its investment mandate commensurate with current conditions, opportunities, and constraints in relevant financial markets. It will be reporting directly to the Board.
Additionally, the NRF Board of Directors can also appoint a Senior Investment Adviser and Analyst to assist with carrying out its mandate.
Meanwhile, the NRF Bill also proposes a $10 million fine and five years’ imprisonment for anyone who gives materially false and misleading information or permits such information to be included in any reports or documents. A similar penalty will be imposed on anyone who discloses official information that is deemed confidential as well as anyone who fails to publish the information required to be made known under the law.
The previous NRF legislation passed by the A Partnership for National Unity (APNU/AFC) Administration contained sweeping measures and excessive ministerial influence. However, the current People’s Progressive Party/Civic (PPP/C) Government had indicated from the inception that it wanted the oil revenues to be insulated from political manoeuvring.
This position was emphasised by Minister Singh during a broadcast programme on the eve of Thursday’s tabling of the NRF Bill, as he explained that the intention was to avoid a reoccurrence of the situation where a Minister concealed receiving monies from operators in the petroleum sector.
He was referring to the US$18 million signing bonus that Guyana received from ExxonMobil, but the money was stashed away in a separate account by then Finance Minister under the coalition administration, Winston Jordan, instead of being placed in the Consolidated Fund as required by law. This information came to light over a year later.
“We have said that we would like to explicitly require the Minister to publish, within three months, every single deposit into the Fund – to publish in Gazette and to notify the National Assembly; and to make failure to do so a criminal offence. We’ve said so publicly and we are proposing to do so in the Bill…,” Dr Singh posited.
According to the Finance Minister, this is to enforce transparency with the oil funds.
Moreover, he noted that the PPP/C’s NRF Bill was not seeking to completely discard the coalition’s NRF Act, which was passed in the National Assembly in January 2019 at a time when the APNU/AFC Government was illegitimate after being toppled by a No-Confidence Motion the previous month.
“It does seek to address the most fundamental deficiencies of the Bill that had been taken through the Parliament by the APNU/AFC. And it seeks to, first of all, strengthen governance and management, to improve transparency and accountability, and in particular, to increase the penalties for non-publication of information…,” the Minister noted.
More importantly, however, Dr Singh pointed out that the proposed legislation also simplifies, makes more transparent, and removes the discretion in the determination of the amount that will be transferred from the fund to the National Budget.
The NRF legislation proposes that the maximum withdrawals from the Fund in a fiscal year cannot exceed the amount approved by the National Assembly for that period and that all withdrawals be deposited into the Consolidated Fund.
These monies are only to be used to finance: “national development priorities including any initiative aimed at realising an inclusive green economy, and essential projects that are directly related to ameliorating the effect of a major natural disaster”.
Based on the recent figures given, there is approximately US$534 million in oil revenues that Guyana has earned thus far, including some US$388.7 million from the seven lifts of more than seven million barrels of oil to date, being held in the Federal Reserve Bank of New York.