US$11.6m loan from IDB tar­gets oil and gas gover­nance, clean en­ergy

Stabroek News - - STABROEK NEWS -

The In­ter-Amer­i­can De­vel­op­ment Bank (IDB) has made avail­able to Guyana a US$11.64 mil­lion loan to as­sist the coun­try in pre­par­ing for its tran­si­tion to­wards be­com­ing a ma­jor oil and gas pro­duc­ing state.

Ac­cord­ing to an IDB press re­lease yes­ter­day, this is a pol­icy-based loan that is de­signed to sup­port the strength­en­ing and the sus­tain­abil­ity of the en­ergy sec­tor in Guyana by con­tribut­ing to the in­sti­tu­tional de­vel­op­ment of oil and gas gover­nance and the de­vel­op­ment of cleaner en­ergy sources for elec­tric­ity gen­er­a­tion.

The loan is to be funded in two com­po­nents to­talling US$11.64 mil­lion. The first com­po­nent of US$5.82 mil­lion from the IDB’s Or­di­nary Cap­i­tal, is to be dis­bursed within two years, with a grace pe­riod of 5.5 years, and an in­ter­est rate based on the Lon­don In­ter­bank Of­fered Rate (LI­BOR). The se­cond com­po­nent of US$5.82 mil­lion from the IDB’s Con­ces­sional Or­di­nary Cap­i­tal, is to be dis­bursed within two years, with a grace pe­riod of 40 years, and a 0.25% in­ter­est rate, the IDB re­lease added.

The spe­cific ob­jec­tives of this loan pro­gramme are two-fold. The first ob­jec­tive is to de­velop a man­age­ment and plan­ning frame­work for Guyana’s oil and gas sec­tor and the se­cond is to con­trib­ute to­wards the de­vel­op­ment of a pol­icy frame­work so that Guyana may diver­sify its elec­tric­ity gen­er­a­tion ma­trix us­ing cleaner or re­new­able sources. The IDB has fur­ther dis­closed that the ex­e­cut­ing agency will be the Min­istry of Fi­nance

The agreed-upon pol­icy com­mit­ments of the first tranche of the pro­gramme are: (1) cre­ation of the De­part­ment of En­ergy (DE) within the Min­istry of the Pres­i­dency to take over re­spon­si­bil­i­ties re­lated to the gover­nance and de­vel­op­ment of Guyana’s oil and gas sec­tor; (2) ap­proval by the DE of a draft roadmap to de­velop Guyana’s oil and gas in­sti­tu­tional frame­work, and; (3) de­sign of a model con­tract for fu­ture Pro­duc­tion Shar­ing Agree­ments (PSA) by the DE and pre­sented to Guyana’s Min­istry of the Pres­i­dency (MoP).

The agreed-upon pol­icy com­mit­ments for the se­cond tranche are: (1) a DE func­tions man­ual es­tab­lish­ing its or­gan­i­sa­tional struc­ture, bud­get and staff al­lo­ca­tion, ap­proved by the MoP; (2) a PSA set of pro­to­cols and mech­a­nisms for con­tract man­age­ment; and (3) an oil and gas de­ple­tion pol­icy de­signed by the DE and pre­sented for ap­proval to the MoP. Fi­nally, the pro­gramme will aid the Guyana Gov­ern­ment in the de­vel­op­ment of a pol­icy frame­work to diver­sify and pro­mote the sus­tain­abil­ity of Guyana’s elec­tric­ity gen­er­a­tion ma­trix.

Guyana’s new en­ergy sce­nario, which will likely yield sig­nif­i­cant rev­enues for the gov­ern­ment, rep­re­sents a trans­for­ma­tive shift in Guyana’s de­vel­op­ment tra­jec­tory. The IDB re­lease said that it em­bod­ies a cru­cial and un­prece­dented op­por­tu­nity for eco­nomic growth and sus­tain­able de­vel­op­ment.

The IDB says it is cer­tain that if han­dled well, the coun­try can en­joy a boost in the over­all stan­dard of liv­ing. How­ever, there is con­sid­er­able work to be done so that Guyana can en­joy the ben­e­fits of its re­cent - and po­ten­tial – oil and gas wealth, the re­lease said, adding that too of­ten re­source-rich coun­tries have be­come or re­mained poor as a re­sult of in­ad­e­quate re­source man­age­ment. Hence, there is an ur­gent need to im­prove the gover­nance of Guyana’s oil and gas sec­tor ahead of the start of pro­duc­tion in 2020, it added.

Fri Sat Sun 07/12/18 08/12/18 09/12/18 05:00hrs 05:30hrs 05:30hrs

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