The issue of a SWF was against raised at the just concluded Guyana Oil and Gas Association (GOGA) conference and exhibition with the Deputy Chief of Mission at the US Embassy here, Terry Steers –Gonzalez, saying that the private sector as well as the government and civil society will have to play an integral role in shaping the future direction of the society.
“Guyana is at the cusp of transformation,” he said, adding “it will be critical to think now about how best to invest those revenues”.
Steers-Gonzalez said that while the Guyana economy “has been doing well,” the establishment of a SWF is the cornerstone “or crown jewel” in any new gas regime, since it will provide Guyana with an opportunity to invest in its future.
Natural Resources Minister Raphael Trotman said that the Guyana Sovereign Wealth Fund Bill had been handed over to the Minister of Finance who will be responsible for tabling it in the National Assembly.
“It’s, hopefully, not necessarily, going to be passed this year into Act but, the intention is that later this year it will be brought to the public for examination, scrutiny and improvement,” Trotman noted.
A Government statement described the SWF as 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.
“These monies 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 presented to the minister last December.”
It said the Bill is fashioned after international model, particularly Norway and Trotman said “we sought to fashion a Bill that held faithful to what is known as the Santiago Principles but at the same time, reflected the unique Guyanese context”.
The Santiago Principles are a set of generally accepted principles and practices that reflect SWFs investment practices and objectives.
However, concerns over the implications of the Bill in relation to Guyana’s Consolidated Fund have been raised.
Attorney-at-law and accountant, Christopher Ram, questioned how the Bill will be accommodated within the Context of Article 216 of the Constitution that states all monies payable to the state of Guyana have to go into the Consolidated Fund.
“The Sovereign Wealth Fund, commendable as it is, will certainly require a constitutional amendment unless by some legal genius we create the Sovereign Wealth Fund as a sub fund of the Consolidated Fund,” Ram queried.
Trotman assured that the government will not in any way flout the constitution. “If needed we will have to make some adjustments but the Fund will not in any way try to do anything that is parallel or, in contravention to the Constitution of Guyana,” Trotman said.
He said Guyana’s SWF seeks to also set aside revenues from the other industries in the extractive sector like gold, timber, bauxite and other rare minerals that are mined.
“So by the time oil revenue comes, we would have gained both experience and become more disciplined in managing our resources,” Trotman explained.
In preparation for oil production by 2020, the government has been drafting new legislation and updating existing legislation to govern the oil and gas sector.
The Ministry has already completed a review aimed at updating the Petroleum Exploration and Production Act of 1986. Additionally, the draft Local Content Policy will be made available to the public by the end of the month.
- Countries: Guyana