Insulation of Petroleum Commission from interference vital, oil consultant argues

-Trotman says issue being addressed in revamped bill

Dr Valerie Marcel

Insulation of the impending Petroleum Commission must be a priority, according to oil consultant Dr Valerie Marcel.

“Those institutions do risk being populated by individuals who do not have the necessary technical experience but the right political connections. And then once positions are filled, political interference may continue in decision making,” Dr Marcel, who is a  Chatham House Fellow and  Project Head of the New Petroleum Producers Discussion Group told Sunday Stabroek.

“The lessons from other emerging producer countries are that such institutions need to be established as professional, technocratic bodies. Recruitment and procurement should be done through an open, competitive recruitment process,” she added.

Raphael Trotman

Marcel believes that in addition, it is important that a strong message be sent from the top leadership about the standards by which the petroleum commission will operate.

She said that it is also important to bolster the checks and balances in the new system. Those “checks” she says, can come from the Parliament and the Auditor General.

Government has meanwhile assured that not only is the bill to establish the Commission near completion, it has been reworked to ensure its independence.

“I received the redrafted bill from Miss Tasheen Khan [World Bank Director for Latin America and the Caribbean] about three weeks ago. It is ready for resubmission. At our invitation, they took the bill and reworked it, in fact, genderised it, and also made it more insulated from political interference. Some finishing touches are being applied to it,” Minister of Natural Resources Raphael Trotman said last week, when asked by this newspaper for an update on the bill.

“There were experts here all of last week [last week of July]. The bill will be sent back to the President and will be brought forward, I believe, when the Department of Energy settles in, but certainly we do have an overhauled bill. We listened. I even asked Chris Ram for his inputs, I called up Mr. Ralph Ramkarran and Ralph willingly shared his own views. We canvassed as many views as we could get and made a kind of a spreadsheet of all the comments and criticisms, and the World Bank agreed to do a complete overhaul, based on international best standards and practices. So now it is for us to go to the Department of Energy and for the Department to say when it will come forward,” he added.

Before the conception of the Department of Energy, which is now being set up, the bill was crafted to cater for the establishment of the Petroleum Commission for oversight of the oil and gas sector.

‘Concerns’

Opposition Leader Bharrat Jagdeo says that with both a Department of Energy and a Petroleum Commission being established, Guyana’s citizenry needs a clear understanding of the functions of both and if there will be any overlaps.

“We know very little about the structure of the department and its mandate and how it will conflict with or complement the Petroleum Commission,” Jagdeo said.

“What will be the responsibility of this department? What will be the responsibility of the Petroleum Commission? That is supposed to be another technical body. How much political influence will be exerted on this department? These are concerns we will seek to get answers to,”  added.

The Petroleum Commission Bill, which seeks to provide the framework for the monitoring and regulation of efficient, safe, effective and environmentally responsible oil exploration, development and production, was presented to the National Assembly in May of last year.

But after rejection from the opposition People’s Progressive Party/Civic over many clauses it viewed as biased. After criticisms from stakeholders and citizens and gaps pointed out by the Inter-American Development Bank, it was sent to a Special Select Committee, where significant changes were expected to be made.

When the Bill was debated in June last year, the opposition argued that it vested too much power in the Minister of Natural Resources and urged that it be adjusted to reflect an apolitical stance towards the sector.

In the interim, a Petroleum Directorate was formed by Trotman and reviewing of the very bill was part of its responsibilities.

In February of this year, Trotman abruptly announced that he and his ministry were giving up responsibilities for the oil and gas sector and that the Department of Energy, governed by the President David Granger, would be formed. He said then that he had given the President prior notice of his actions as he believed that Granger should lead the vision for the oil and gas sector.

Nothing else was said of the bill after that announcement until Trotman disclosed in May that the World Bank had expressed interest in helping with the redrafting.

Since then, questions have been raised by the opposition on the sloth in bringing it back to the House for passage so that the Commission could be established.

At a recent University of Guyana oil and gas forum, several experts also underscored the importance of this country having the necessary legal and regulatory framework. University of the West Indies Professor Emeritus of Mechanical Engineering, Clement Imbert stressed that that the laws and regulations would ensure that companies are held accountable even as the environment and populace are protected.

“You cannot depend on the companies to tell you the truth. If anyone of them is here forgive me…but you have to verify everything they are telling you. So, your state commissions, ministries, et cetera, all have to be well equipped, as well as the infrastructure and human resource. I am talking the laboratories… the lawyers and so on needed to do the verification to ensure you are getting a fair deal,” he said.

‘Learning the ropes’

Meanwhile, Marcel hopes that when a bill is passed, it distinguishes clearly the roles of both the Petroleum Commission and the Department of Energy and that the latter isn’t overlapped into its operations. She weighed in on what she believes some of its functions should be.

“The Petroleum Com-mission needs the capacity to review, challenge and approve the oil company plans to ensure the development is in the best interest of Guyana. It needs to monitor their activities against the country’s HSSE [Health, Security, Safety and Environmental] regulations and then audit their costs [which are recoverable],” she said.

But given that those tasks can be “challenging” for an emerging producer like Guyana, which is only now “learning the ropes,” Marcel urges that government invest in the necessary skills to support the Commission. “It needs people who have worked in oil companies [which means the salaries have to be higher than regular civil service],” she said, while noting that Chatham House has “advised governments to employ senior, qualified expats for one to two year contracts to put in place the right systems and transfer skills to the nationals. These expats can be from other government regulatory agencies too, which is something the New Producers Group supports.”

Trotman said that while the Petroleum Commission will be independent, there will be policy input from the Department of Energy but the two bodies will function separately.

He explained, “The Department of Energy is no different from a ministry. It is my expectation that one day the department will evolve into a full-fledged ministry that deals with policy issues. The commission is the regulations body, so, like for example, you have Forestry Commission and the GGMC for mining, so too will the Commission take care of issues as licensing and such for oil and gas. A Department of Energy is policy-directed, just like a ministry. It just will be embedded at the Ministry of the Presidency. So, there is no conflict or contradiction between the two. There is no place in the world where government’s policies are not implemented, but what we want to do is insulate the Commission from the day-to-day micromanaging—taken to a further extreme, interference from politicians.”

He added, “Under our semi-autonomous construct, which we use now, the minister always sets policy but the management or implementation of that policy is always done by the board. That is what we use now… What we want to ensure is insulation. But only governments can set policy, whether in Ghana or Norway or the United States. So, there is no difficulty. What we want to also do is to give security of tenure.  Certain offices overlap administrations, so we don’t want some officers to feel they owe their jobs to a particular government. Little things like that,” he added, while saying that he was “happy” that his part with the bill was over.

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