first_img2019 standards– State spending on social services, subsidies must be tracked, disclosedWhen it comes to spending the millions of US dollars that the oil and gas sector brings, the Extractive Industry Transparency Index (EITI) has retained a number of measures for member countries to increase transparency and accountability.The EITI 2019 standardThese measures are contained in the EITI’s 2019 standards, which were recently released by the global watchdog, and member states are expected to fully comply. According to the standards, the Government should ensure full disclosure of State-Owned Enterprises (SOEs) payouts.According to the EITI standards, SOE payouts or quasi-fiscal expenditures include instances where Government spends oil and gas revenues on social services, public infrastructure, fuel subsidies, and national debt servicing. EITI designates these expenses as anything outside of the national budgetary process.“Where State participation in the extractive industries gives rise to material revenue payments, implementing countries must include disclosures from SOEs on their quasi-fiscal expenditures,” the standards stated.“The multi-stakeholder group is required to develop a reporting process with a view to achieving a level of transparency commensurate with other payments and revenue streams, and should include SOE subsidiaries and joint ventures.”Meanwhile, the standards also stipulated the disclosure of details regarding beneficial owners of oil blocks. This includes the percentage of ownership. It also stipulates the filing of ownership information with regulators.This comes even as revelations have emerged that State Assets Recovery Agency (SARA) executive member Eric Phillips having financial interests in an oil company vying for oil blocks in local waters.Cash payoutsSince ExxonMobil discovered oil and estimates have put the amount of money Guyana will earn in the range of billions of US dollars, there have been questions over how this money will be spent.One proposal has been that the Government spend a percentage of the oil revenue on direct cash transfers to the people, whether conditional or not. One proponent of this has been economist Dr Clive Thomas, who has called for some of the oil wealth to go to households in Guyana.Dr Thomas has noted that citizens were better in tune with their needs and what they were lacking in their personal lives. He has noted that his experience as an economist as well as research have shown that citizens given cash payouts were more likely to use them to improve their lives than squander the money.“People heard of stories of boxers who made a lot of money in fights, but then end up being poor. They know stories of people who won the lotteries and ended up being poor and they try to generalise from that, that this is the experience of every oil and gas economy. If we look at the facts, while that can and does happen, in most cases people who win lotteries end up by being in the situation where their status has improved their lives and chances.“It is not as if there are no risks … I am not claiming that calling for cash transfers means people might not spend it on consumption or wastage, but I am saying they would better conserve it than any other outside agencies – whether you call it local or central government,” Dr Thomas had said last year during a public forum in Buxton.Working People’s Alliance (WPA) executive Dr David Hinds has said that his party would be pushing for cash transfers. But, Government has been lukewarm to this idea. President David Granger, when asked about this proposal last year, had said there was “no evidential basis” for cash payouts.MoneyGovernment has, however, signed the Natural Resources Fund Bill into law. The Bill sets out, among other things, a 22-member Public Accountability and Oversight Committee that will oversee the Fund. The Committee is supposed to include representatives from the media, Private Sector and the Bar Association.Following its 10th discovery of oil in the Stabroek Block, ExxonMobil had estimated the recoverable resource in the Block to be five billion oil-equivalent barrels. With oil at US$50 a barrel, that equates to well over US$200 billion.Exxon has since revised this figure upwards after three more discoveries, the last one being at the Yellowtail-1 well in April. More drilling is also scheduled for this year and it was only days ago that its first Floating Production, Storage and Offloading (FPSO) vessel for Guyana, the Liza Destiny, was commissioned.In addition, an independent assessment, or competent persons’ report, had found that 2.9 billion barrels of oil existed in the Orinduik Block. All of this will represent a monetary windfall for Guyana, which will be saved and invested through the Natural Resources Fund. Previously, a green paper on the Fund was laid in the National Assembly.Then, there is the issue of the Fund Managers. Investment firm Merrill Lynch has previously expressed an interest in being involved in managing Guyana’s oil finances. In fact, representatives from the firm had reportedly met with Central Bank Governor, Dr Gobind Ganga.The Opposition has urged that the vetting process for the Fund Manager be a rigorous one. Touching on this subject, too, on Tuesday, US Ambassador Sarah-Ann Lynch recommended that should Guyana go this route, credible and efficient Fund Managers be chosen.last_img

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