GUYANA: Govt. puts hold on US$20M World Bank loan to strengthen scrutiny of oil sector

Apr 26, 2022 – Kaieteur News – By Kiana Wilburg

Since the PPP/C Government has not requested any disbursements from a US$20M loan Guyana took three years ago to help strengthen the nation’s capacity to manage the oil sector effectively, the World Bank said it has been forced to downgrade the country’s performance score on the loan.

The latest implementation status and results (ISR) report recalls that the money was approved on March 29, 2019 for the Guyana Petroleum Resources Governance and Management Project (GPRGMP). The programme’s objective is to ensure the enhancement of legal and institutional frameworks and the strengthening of the capacity of key institutions to manage the oil and gas sector.

A Financing Agreement in the amount of US$20 million was signed and declared effective on April 11, 2019 under the David Granger administration. The ISR, which was reviewed by Kaieteur News presents the implementation status of GPRGMP as of March 2022.       

The financial institution said, “The project’s overall implementation has been downgraded to ‘Moderately Unsatisfactory’, with around 24% of the total credit disbursed and no disbursement requests received by the Bank since October 2020.”

Starting in the early part of the second quarter of 2021 and following a seven-month hiatus, the bank said traction with, and engagement by the client had improved markedly under the Ministry of Natural Resources leadership, and momentum on procurement activities picked up considerably.

However, starting in the fourth quarter of last year, the bank said project implementation came to a halt, particularly on critical procurement activities intended to have helped the project reacquire its implementation timeline, and meet its indicators and performance objectives.

The bank in its report said that the government has indicated as recently as late December 2021, its intention to “refine the scope of the project to bring it in line with current government priorities.”

The World Bank said it remains on standby awaiting any guidance from the Government of Guyana on the status and direction of the project and a resumption of critical project activities.

Kaieteur News understands that the project has four components: Component A – Enhancement of Legal Framework and Stakeholder Engagement: (US$3.20 M), Component B – Capacity Building of Key Institutions: (US $10.70 M), Component C – Enhancement of Fiscal Management Systems: (US$3.50 M), and Component – D. Project Management & Project Preparation Facilities: (Cost $2.60 M).

For explanatory purposes, the first component being for the enhancement of legal framework and stakeholder engagement, aims to support the update of Guyana’s legal and regulatory frameworks for the governance and oversight of the sector as well as support stakeholder engagement and transparency. This component includes two subcomponents: update the legal and regulatory frameworks for the sector, and support stakeholder engagement and transparency.

The second component on the capacity building of key institutions includes four subcomponents: support immediate technical needs at key institutions with responsibility for oil and gas, support critical training needs at key institutions with responsibility for the sector, build up petroleum data management, and strengthen environmental and social management.

The third component is the enhancement of fiscal management deals with, among other things, improving Guyana’s capacity to manage the Natural Resource Fund.

Finally, the fourth component gives proper management and coordination of all project activities financed under the project. More specifically, it provides support and builds the Government’s systems for procurement and financial management, while allowing for the implementation of safeguards for proper management, monitoring.

Also read:

Post a comment or leave a trackback: Trackback URL.

Comments

  • WIC  On 04/29/2022 at 1:56 am

    What are we missing here? surely the intended purpose of the loan can be financed through cash flow from the sales of oil now being pumped? In fact, Guyana shouldn’t be borrowing for any project as in most cases, the terms of loans will be unduly onerous and primarily of benefit to the lenders. Instead, the govt. should slow all development projects to be in line with cash flow and as much local human capital that’s available. The latter would ensure local people getting a crack at the better paying jobs and not the crumbs.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: