Based on the Natural Resource Fund (NRF) Act 2021, it is the Board of Directors appointed by the President who will have operational control of the NRF. On Monday, the Bank of Guyana signed an agreement to officially hand over that control to the Board.
According to Section 5 (6) (d) of the Act, the Board is required to enter into an operational agreement with the Bank so that management of the Fund can change hands. This agreement was signed on Wednesday, just two days after the reading of the 2023 Budget.
On Wednesday, in a statement, the Finance Ministry explained that Finance Minister Dr Ashni Singh oversaw the signing, which was done by Central Bank Governor, Dr Gobind Ganga and NRF Board Chairman, Major General (Retired) Joe Singh.
“One of the key amendments in the NRF Act 2021 was strengthening the governance architecture of the Fund through the establishment of a Board of Directors tasked with the overall management of the Fund, reviewing and approving the policies of the Fund and monitoring its performance; thereby separating the management of the Fund from the Minister responsible for Finance.
“In addition, a nine-member Public Accountability and Oversight Committee (PAOC), responsible for providing non-governmental oversight of the operations of the Fund, replaced the cumbersome 22-member committee previously proposed. The Board of Directors and PAOC members were appointed in August 2022,” the Ministry explained.
In keeping with the requirement of the NRF Act, notifications of receipts of petroleum revenues have been published in the Official Gazette and tabled in Parliament since April 2022.
“Prior to the signing of the Operational Agreement, Minister Singh provided policy guidance to the Board of Directors of the Natural Resource Fund, with Budget 2023 having been presented on Monday, January 16, 2023,” the Ministry said.
It was pointed out by the Finance Ministry that the International Monetary Fund (IMF) Article IV Mission Report that 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.
Also witnessing the signing of the Operational Agreement were members of the Board of Directors Ambassador Carolyn Rodrigues-Birkett, Professor Compton Bourne, OE and Dunstan Barrow, CCH, along with Chief Accountant of the Bank of Guyana, Maurice Munro.
The recent $781.9 billion budget was financed for the first time by both oil and climate funds. Prior to the date for the budget even being announced, it had been revealed earlier this month that a total of US$1 billion (G$200 billion) would be made available from the NRF for use in the Budget.
Last year’s Budget was the first time Guyana had used oil funds to finance a national budget. In fact, the Government made three withdrawals from the Fund last year to finance Guyana’s national development plans. These withdrawals amounted to US$607.6 million (G$126 billion) overall.
The funds from the NRF have their origins in the Stabroek Block – Guyana’s 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. (G3)