GUYANA: Government to dominate NRF oil fund committees

  • President, Minister to make all appointments
  • No place made for media, transparency groups

Pres. Irfaan Ali

Dec 17, 2021 – Kaieteur News – The amendments to the legislation governing the Natural Resource Fund (NRF) which were tabled on Thursday in the National Assembly by Finance Minister, Dr.Ashni Singh, propose that there be two key committees and a Board of Directors to preside over the management of the nation’s oil money.

Importantly, all of the members on these committees as well as the Board will be appointed by the President or his Minister responsible for natural resources.

As part of the governance structure for the NRF, the government proposes to establish a Board of Directors which shall comprise of not less than three and not more than five persons who shall be appointed by the President, and one of whom shall be appointed Chairperson by the President.       

The amended Bill proposes that the directors be selected from among persons who have wide experience and ability in legal, financial, business or administrative matters. It was noted that one of the Board members shall be nominated by the National Assembly along with one from the private sector. The Bill states that the directors shall be appointed for a period not exceeding two years and shall be eligible for reappointment.

It is being proposed that the appointment of the directors and every change in appointment shall be published in the Official Gazette, on the website of Ministry of Natural Resources and in two daily newspapers circulating in Guyana.

With respect to its functions, it is being proposed that the Board be responsible for the overall management of the Fund, reviewing and approving policies of the Fund, monitoring the performance of the Fund, ensuring compliance with approved policies, exerting general oversight of all aspects of operations, and ensuring the Fund is managed in compliance with the Act and other applicable laws.

The Board would also be responsible for preparing the investment mandate. It was noted that when preparing or amending the mandate, the Board would have to seek the advice of the Investment Committee, be assisted by the Senior Investment Advisor and Analyst of the Fund and enter into an operational agreement with the Central Bank for the operational management of the fund.

Apart from the Board, there would also be an Investment Committee which shall have seven members appointed by the Minister of Natural Resources. They will include nominees from the Minister of Finance, Minister in charge of the oil sector, the Attorney General, Leader of the Opposition, the Private Sector and two ex officio non-voting members: the Senior Investment Advisor and Analyst and a nominee from the Governor of Bank of Guyana.

The Committee would be required to take account of the current conditions, opportunities and constraints in the relevant financial matters, the principle of financial diversification with the objective of maximizing risk-adjusted financial returns and taking into account the capacity of the institutions involved in the management of the fund and the nation’s ability to bear financial risk.

As for the Public Accountability and Oversight Committee, Kaieteur News previously reported Vice President, Bharrat Jagdeo, as saying this would not be preserved in the amended law since 22 members would make it nearly impossible to run the fund.

Based on the amendments, the government has kept a revised version of the body which includes nine members, all of whom will be appointed by the President. They will include one nominee from the National Assembly, two from the private sector, two from organized labour, one from the professions and three from the religious community.

Importantly, there is no place for media and transparency groups which were catered for in the original legislation. The amended legislation is expected to be debated and passed before year-end.

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Comments

  • Chris Prashad  On 12/19/2021 at 7:56 pm

    I smell a gang of rats going after the people’s cheese here. Who gave these clowns the authority to override the original arrangement??? They fail to understand that they are employees of the citizens and the citizens must have a say in such a major decision on financial matters that will impact their future. Accountability and transparency are the two most important elements in the management of such a huge industry.
    Who will be the people’s representative in this??? Ali and Jagdeo are clearly showing their intentions down the road. CORRUPTION is flashing red here.
    I warned several times before and I will repeat it here again… the Federal Reserve and all their related Central Banks are Banks are bankrupt. Their charters and licenses have all been revoked by the Guardian of the Global Repository and the Key Integrated Monetary System which have replaced them.
    Entrusting our oil revenues in the hands of these sharks is a huge risk. Both the President and Vice President of Guyana know exactly who I am talking about and yet they choose to ignore this warning…. maybe there is a motive or sinister plan behind this… only time will tell.
    My main concern is that our people will not be left holding the slippery end of the wood they may get.

  • brandli62  On 12/21/2021 at 8:25 am

    The proposed NRF bill by the Ali administration is flawed in many ways. For one, I was to date not able to get access to a document with the complete proposed amendments to the NRF law. How can this be? Second, any changes to the NRF law needs be done on the basis of involving all stakeholders in Guyana. How is this possible when the government want to pass the amendments before the end of the year. This leave essential not time for input from other parties and the civil society. Does President Ali really believe that this approach is fully transparent? On which planet does he live? Third, the spending plan of the NRF is very troubling! As it stands, the current administration will spend most of the oil reserves without saving anything. It will be deferred to later administrations. The Norwegian oil fund, the world’s best sovereign wealth fund, operates by transferring 3% of the fund to the national budget. The bulk of the oil revenues are saved and invested. This is wise and smart way to run a sovereign wealth fund. Fourth, it is unclear who the oil revenues in the NRF will be managed. Typically, this requires a team of professional asset managers with experience on the international markets. This knowledge is largely absent in Guyana. The wise thing to do, is to give a 5-year mandate to the Norwegians to manage the NRF. In the meantime, they could also start training Guyanese asset managers, who would later take over the management. Finally, political interference in the management of the NRF has to be avoided. This could be achieved by mandating that any changes to a revised NRF law requires 2/3 of the votes in parliament. This would force the ruling party and the opposition to work out compromises.

    • Brother Man  On 12/21/2021 at 9:45 am

      Didn’t you learn how to write in paragraphs in school?

      Few people read long, boring, monotonous posts.

      • brandli62  On 12/21/2021 at 2:59 pm

        Brother Man, there is not need to be rude to other people. Be constructive and place your comments that are relevant to the news report above.

  • brandli62  On 12/21/2021 at 2:57 pm

    My main worry with the proposed changes to the NRF law is the fact the the current administration proposes to spend all of the accumulated oil revenues of 600 million USD at once. This is definitely not an approach to build up a growing sovereign wealth fund that is by present law supposed to serve the present and future generations of Guyanese. The responsible thing to do is to limit the annual withdrawals to not more than 3% right from the start. This will allow for the NRF to build up. Initially, the sums that will be going into national budget will be small, i.e. 18 million USD for 2022. However, as the NRF is filled with rapidly increasing oil revenues, the withdrawals will increase concordantly. It is anticipated that by 2030 there will be well over 30 billion USD in the NRF. Hence, 1 billion USD would be going to the national budget in 2030, while preserving the core of the NRF until eternity. The bottom line is that one has to be disciplined initially in withdrawing funds from the NRF. Unfortunately, I presently do not see clear evidence that the present government intends to act in such a responsible manner.

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