14. IMF helping Government – V.010817
Guyana is presently experiencing and witnessing the Black Gold Rush.
These posts illustrate what is going on in this country in the process to prepare itself for the oil boom period. And its efforts to transform in an oil-curse-proof country, such as with the help of IMF.
1. IMF helping Guyana build capacity to manage oil proceeds
2. IMF encourages Guyana to improve public procurement
3. How much money would Guyana receive from ExxonMobil’s offshore oil production? – Marcel Chin-A-Lien – 29 July, 2017
1) IMF helping Guyana build capacity to manage oil proceeds
July 21, 2017 - www.kaieteurnewsonline.com
With Guyana shifting into position to start oil production in 2020, its ability to properly manage the proceeds is expected to see a significant boost, now that the International Monetary Fund (IMF) is here to provide a helping hand.
Minister of State Joseph Harmon, during the weekly post-Cabinet press briefing at the Ministry of the Presidency in Georgetown, told media operatives yesterday that the team is here providing technical assistance and advice to government with regards to building capacity to manage the monies that will come from the sector.
The delegation, he said, came here following a request made to the organisation by the Finance Minister, Winston Jordan.
Harmon said that Cabinet met the team recently and was informed of the delegation’s mission here.
The Minister said that the Mission Leader informed government that Guyana had become eligible for assistance from the IMF under a donor-funded trust fund.
The team is also expected to carry out a scoping assessment of government’s policy direction.
That assessment, Harmon explained, will enable the IMF to determine the areas in which assistance could be provided.
The Minister noted also that the team will meet with persons and agencies involved in managing revenues from the sector.
Further, a note providing the details of the IMF assessment and forms of assistance will be presented to the government at the end of the mission.
The team’s presence here would come three months after the Executive Board of the IMF concluded its Article IV consultation with Guyana.
Under this article, the organisation holds bilateral discussions with members usually every year, where a staff team visits the country, collects economic and financial information, and discusses with state officials the country’s economic developments and policies.
On return to headquarters, the staff prepares a report, which forms the basis for discussion by the IMF’s Executive Board.
The IMF Directors upon reviewing that compiled report, lauded the government’s plans to establish a comprehensive framework for managing its upcoming oil wealth, and stressed the importance of having a transparent and rules-based framework in place before production begins.
The IMF is an international organization comprised of 189 countries working together to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.
2) IMF encourages Guyana to improve public procurement – Jul 23, 2017
The International Monetary Fund (IMF) is encouraging the government to bring its procurement
systems in line with international best practices so as to enhance the quality of public investment.
The global body made this statement in its 2017 report on Guyana’s economy.
According to the IMF, enhancing the efficiency of public investment management could help foster economic growth. It noted that public investment has been relatively low for the past two years. The IMF believes that this is due to the 2015 elections, and delays in the procurement and execution of projects in 2016.
It said, “This has been a drag on construction, with spillovers to other sectors. It is therefore important to avoid similar delays in 2017. Bringing project selection, public procurement and investment management in line with international best practices would enhance the efficiency, timeliness and quality of public investment, including through Public Private Partnerships (PPPs).”
In the near term, the IMF said that the government could help to unlock additional external concessional financing, reduce domestic financing needs and bring foreign exchange into the economy.
The officials noted that the IMF’s Public Investment Management Assessment (PIMA) could help streamline the appraisal, selection and execution of projects. So far, the Government has expressed an interest in that assessment.
Perceptions of corruption and favouritism have for years, sullied the image of Guyana’s public procurement system.
However, the APNU+AFC Government and top officials at the National Procurement and Tender Administration Board (NPTAB) have made it clear that while there remains room for improvement, they are very satisfied with the progress they have made in arming the system with effective anti-corruption mechanisms.
This was supported and reiterated by NPTAB Head, Berkley Wickham.
Wickham had informed this newspaper on some of the key initiatives and interventions made since he assumed office as Chairman of the NPTAB.
He said that every initiative or intervention undertaken thus far was aimed at changing the long held perception of a tainted public procurement process.
The difficulty of this task was never underestimated but its success is rooted in the need to achieve transparency, accountability, fairness, integrity and efficiency, he added.
The NPTAB head said, “We are not there yet but significant advances have been made. Some of these are increases in the Threshold limits for Regional, Ministerial/Agency Tender Boards; work in progress in developing debarment procedures; the Bid Protest Committee has been established and is functional; The Public Procurement Commission has been established; and we have been an active participant in the Task Force for the development of the Caricom Public Procurement Regime”
Wickham said that NPTAB has also been working with the Ministry of Business to facilitate the participation of small businesses and women owned businesses in the Public Procurement process.
Pursuant to Section 17 of the Procurement Act 2003, Wickham said that the National Procurement and Tender Administration Board has been organizing training in public procurement.
The existing legislation does not provide for e-procurement, he added. He said that an upcoming legislation review will provide for this.
He promised, too, that a debarment procedure will be fashioned for implementation.
The NPTAB Head said, “There was further training in February in contract compliance and management. We have been very busy this past year. In my opinion, we are poised to take procurement out of a long period of stagnation.”
Wickham said that moves are being made to ensure that the Procurement system is elevated onto a pathway where electronic government procurement is the major tool to build a world class procurement process in Guyana.
Additionally, at a national consultation on Caricom Single Market and Economy (CSME) Public Procurement System requirements, Finance Minister Winston Jordan had outlined that a number of changes are in the pipeline.
The Finance Minister said that under the Public Procurement Modernization Project, for which funding has been provided by the Inter-American Development Bank under a Technical Cooperation Agreement called Public Procurement Modernization and Financial Management Strengthening in Guyana, Component One will provide support to improve efficiency and value for money in public procurement through strategic planning and introduction of e-government procurement.
He said that the successor initiative by the CSME is Development and Implementation of the Infrastructure and Instruments for an Integrated CSME Procurement Regime.
Jordan said that the deliverables include the Procurement Bill and Regulations, Procurement Software and Hardware Installation, Development of Training modules and the ability to roll out these modules online.
3) How much money would Guyana get from ExxonMobil’s offshore oil production ?
Assuming that the ExxonMobil PPL contains the same articles as the PPL with CGX.
This is a simple estimate of the monies involved. But it gives a fair idea of what everyone wants to know.
Precise data can be obtained by making a full economic analysis.
A gross oil production volume of 1,5 billion barrels, average production of 160 million/day during 13 years, oil price US$ 50 / barrel, Capex-Opex 11 billion US$, initial production in 2020:
Total oil revenue would be some 75 US$ billion.
Total profit oil is 68 billion US$.
Guyana Government profit share is some 36 billion US$. This amount would be received in the period 2020 – 2033.
Payout is successful in about 4 years.
The economics of the Liza – Payara – Snoek giant fields development is thus highly profitable, with an IRR exceeding 100%.
Marcel Chin-A-Lien – Advisor Petroleum Exploration & Production, Business-Commercial-Policy Development, PSC’s.
For grounded, vintage stewardship to successfully find lots of oil, develop your business and get sustained value for money ?
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