The Opposition, A Partnership of National Unity and Alliance for Change (APNU+AFC), has expressed dismay with the content and consultation of the Petroleum Activities Bill. In a release, the coalition said from preliminary review of the just-released Bill and the unresponsiveness of the Government with regards to the experience gained and lessons learnt from the problems and challenges that have engulfed the local oil and gas industry over the last few years, is concerning.
Committing to the speak on the bill, in greater detail when it is presented to the National Assembly, the coalition has outlined its initial thoughts as presented below: –
“ 1. INSURANCE AND LIABILITY COVERAGE. The Bill is muted on insurance and liability issues, despite the serious legal disputes that have arisen in our courts. This Bill potentially provides a good opportunity for us to tighten Guyana’s legislative framework so that citizens can be confident that the company assumes full liability for all environmental and industrial damages and accidents, (including oil spills) both in response to and outside of all claims and demands.
“2. AUCTIONS. The Bill does not address the principles and rules that should govern the auction process. Such principles and rules should promote transparency, consistency, and predictability and should reduce opportunities for corruption, insider trading, and flipping of leases or concessions.
“3. SPENDING BY GOVERNMENT DIRECTLY FROM COST OIL. The Bill, in tandem with the country’s financial management laws, should address the issue of government spending on infrastructure directly through cost oil, as this form of unregulated and underhand expenditure could lead to high-level corruption and highly costly misuse and waste of public funds. At minimum, such company/government agreements must be tabled in parliament for scrutiny, debate, and approval — as for any other government spending of the people’s money.
“4. FEASIBILITY STUDIES. The current government has demonstrated a disdain for feasibility studies, even studies provided for by the Stabroek Block PSA. This is unacceptable and such studies should be mandated by legislation.
“5. AUDITS. As audits are pivotal in ensuring the country gets its rightful share of oil revenues and are the main mechanism for oversight of company operations, timely and incisive audits must be explicitly mandated by legislation. The petroleum activities law, in tandem with the country’s financial acts, must mandate the timely conduct of audits and the timely release by the government of audit results to parliament and the public. Penalties should be instituted on companies for the deliberate provision of false, incomplete, and deceptive information during an audit.
“6. PETROLEUM COMMISSION. The government continues to take an apathetic approach to establishing a Petroleum Commission. The mandate, powers and functions of the commission should be integrated within the Petroleum Activities Act, similar in pattern to the GGMC and the mining sector.
“7. ROYALTY. Helping companies through the financial crisis is acceptable. But while the Bill addresses reducing or deferring royalty payments to the government by companies, there is no reciprocal or in-fairness provision for increasing royalty rates in situations where companies benefit from sustained high oil prices. Such thinking should be included in the Act, without unduly jeopardizing the predictability of the investment climate or fiscal regime. Legislation should make provisions for a price-based, pre-set sliding or variable royalty rate, such as what obtains in the local gold industry.
“8. Compliance of companies with the Extractive Industries Transparency Initiative (EITI) requirements. The bill is deficient in terms of its silence on the EITI framework. The law must obligate oil companies, the GRA, and the Petroleum Commission to provide information promptly and fully as requested by the GYEITI Secretariat in fulfilment of its mandate.”
The opposition advised the EITI is aimed at improving transparency and accountability in the management of revenues in the oil, gas and mining sectors. “It has a robust yet flexible methodology for disclosing and reconciling company payments and government revenues in implementing countries. EITI therefore promotes better governance in countries rich in natural resources and seeks to reduce the risk of diversion or misappropriation of funds generated by the development of a country’s extractive industries.”
On 25 October 2017, during the APNU+AFC government, Guyana was officially accepted as an EITI implementing country.
Attention was drawn to the fact that several members of civil society have also complained that two weeks is not long enough for public comment on documents as significant as a Bill that governs Guyana’s oil and gas industry.
