Proposed NRF legislation most transparent model – VP Jagdeo

Vice President Bharrat Jagdeo has defended the Natural Resources Fund Bill that was tabled by the PPP/C Government in the National Assembly last week, saying that this is the most transparent model that will not only ensure public scrutiny but also parliamentary oversight on the spending of oil revenues.

He was at the time speaking at a breakfast event hosted for Private Sector representatives at State House on Thursday.
Jagdeo explained that the proposed legislation presents an arms-length relation between the Government, specifically the Finance Minister, and the management of the Fund, where all the country’s earnings from oil production are being held. This, he noted, is a major change from the option that was used by the APNU/AFC Administration in which the Finance Minister dominated the management of oil monies and had total control on how much monies could be withdrawn.
“So, what we did here is we inserted a Board of Directors for the management of the Fund, appointed by the President and not the Minister himself… And on that Board of Directors, we now have representatives from the Private Sector and someone from the Parliament that has to go through a parliamentary process [to] get the support of both sides in the National Assembly… That is a major change in terms of the management of the Fund,” he posited.
According to the Vice President, this model presented by the PPP/C Government allows for more scrutiny in the use of oil revenues. He said that no Minister or any other Government officials can arbitrarily withdraw unlimited amounts from the NRF as was allowed in the coalition’s version that was passed in the National Assembly just weeks after the APNU/AFC Administration had fallen to a No-Confidence Motion and was in illegitimate mode. That legislation contained sweeping measures and excessive ministerial influence.
“We have opted now to replace that with a transparent system that every single Guyanese will know now, how much money will come to the Budget [from the Natural Resources Fund] and how much will be saved. Every person now knows exactly how much and by law. So, you don’t have to have the Finance Minister doing calculations every year any longer. This is the most transparent system for transfers [from] the Fund,” the Vice President asserted.
Jagdeo went on to outline that in addition to public scrutiny, there will also be parliamentary oversight in the use of monies from the Fund that would ensure the APNU/AFC Opposition to have oversight through the National Assembly.
“Every cent that comes to the Budget [from the Fund] will have to finance projects in the Budget and the Budget has to be debated in the National Assembly… So, the Opposition will have parliamentary oversight over the expenditure. The money coming into the Fund, the resources, is just on the financing side but on the expenditure side, it is subjected to a full debate and appropriation in the National Assembly,” VP Jagdeo said.
Moreover, the Vice President pointed out that the Opposition will also have an active role in the Investment Committee that will be established to advise the Board of Directors on its investment mandate commensurate with current conditions, opportunities and constraints in relevant financial markets.
“[The Opposition will] hold Government accountable for the expenditure through the debate on all these resources,” he stated.
Currently, 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 7 million barrels of oil to date, being held in the Federal Reserve Bank of New York. The PPP/C Government has maintained that it would not touch the monies until the proper legislative infrastructure is in place to manage the use of the funds.
To this end, Senior Minister with Responsibility for Finance Dr Ashni Singh last week tabled the Natural Resources Fund Bill in the National Assembly, which states that 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 direction related to ameliorating the effect of a major natural disaster.”
According to the proposed laws, the NRF will be governed by a Board of Directors, comprising of as much as five members, who will be selected from among persons “who have wide experience and ability in legal, financial, business, or administrative matters.”
But in keeping with the aim of having an arms-length approach to revenues earned in the oil and gas sector, the bill explicitly states that the Directors cannot be a Member of Parliament or anyone whose appointment will be a conflict of interest, among other restrictions.
Meanwhile, the NRF Bill also proposes a $10 million fine and five years’ imprisonment for anyone who gives materially false and misleading information or permit such information to be included in any reports or documents. A similar penalty will be imposed on anyone who discloses official information that are deemed confidential as well as anyone who fails to publish information required to be made known under the law.
Additionally, 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 withdrawal be deposited into the Consolidated Fund.