Ministerial powers cut in revised Petroleum Commission bill

When the revised Petroleum Commission Bill returns to Parliament later this year, not only would it have significantly reduced the powers of the subject Minister, it also incorporates clauses aimed at ensuring its independence, transparency and accountability.

Provision has also been made for at least two women to be on the Board of Directors of the Commission and the bill now caters for both genders, according to excerpts of the reviewed Bill seen by Stabroek News.

Moreover, and considering that Guyana is a frontier oil and gas country with no data on petroleum, a recommendation by the World Bank, which helped with the review and redrafting of the Bill,  states that Guyana should establish “and manage a national data repository for digital/soft petroleum data, including digital/soft data as well as hard/physical data such as core samples, cuttings and fluid samples, and manage and undertake research of the petroleum data and a central database of operators and other persons involved in petroleum activities.”

Changes were also made to define a “licensee” as “a physical person or corporate body, or several such persons or corporate bodies acting jointly, holding a licence according to the Petroleum (Exploration and Production) Act 1986 to carry out petroleum activities and “operator” to mean “a licensee or licensees executing, or anyone executing on behalf of a licensee or licensees, the management of petroleum activities.”

Petroleum activities’ definition has also been revised and now means “all activities associated with petroleum deposits, including exploration, production, transportation, and utilisation and decommissioning under a licence, permit, pipeline licence, including planning of such activities, but not including, however, transport of petroleum beyond the delivery point(s) agreed in a development plan.”

The Bill was first presented to the National Assembly in May of last year and when it returned for its second reading and debate one month later, the opposition People’s Progressive Party/Civic staunchly criticized It, questioning the powers granted to the Minister of Natural Resources.

Chatham House Fellow and Project Head of the New Petroleum Producers Discussion Group, Dr Valerie Marcel recently underscored the importance of insulation of the Petroleum Commission from interference.

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.

Minister of Natural Resources Raphael Trotman, under whose tenure the Bill was crafted, has told this newspaper that in addition to the review and recommendations from the World Bank, the reworked Bill will be up once again for stakeholders’ input before it is laid in the National Assembly this year.

When the Bill was being debated in the House last year, objections were also raised about the lack of independence of the commission, general governance and its ability to operate in a non-discriminatory and apolitical manner.

“When we examine section 8 which deals with the Power of the Minister to give directions to the Commission, it is clear that the Commission will hardly be able to work without the direction and control of the Minister. According to Section 8, the Minister is not only allowed to provide policy guidance, but also give direction  to the Commission regarding, size of the establishment, the employment of staff and the terms and conditions of employment, the provision of equipment and use of funds, reorganization of such works of development as to involve a substantial outlay on capital account, training, education and research, the disposal of capital assets; the application of the proceeds of such disposals,” PPP/C MP Irfaan Ali had stated .

“Thus, the Minister is literally empowered to dictate inter alia, how many persons an independent Commission should employ, what should be the terms and conditions of employment for the staff of the Commission, how an independent Commission should use its funds etcetera.    Based on our review of similar legislation in other countries, we were unable to locate one that bestows comparable powers to the Minister. Indeed, based on our review we found that the only power the Minister is granted in other countries is the power to provide policy guidance,” he added.

Reduced

In the revised Bill, only three of seven clauses relating to the duties of the minister have been kept.

“The Minister may give to the Board general directions – (a) as to any policy to be observed and implemented by the Commission in the discharge of its functions; The Commission shall afford to the Minister information requested by him with respect to the functions and business of the Commission and shall furnish the Minister with annual estimates, and any returns as the Minister may request,” it states.

“The Commission shall provide the Minister with the facilities as well as enable the verification of information furnished in pursuance of this section,” it adds.

The old Bill read, “The Minister may give to the Commission general directions –(a) as to any policy to be observed and implemented by the Commission in the discharge of its functions; (b) for the organisation of the Commission to enable it to discharge its functions, including the size of the establishment, the employment of staff and the terms and conditions of employment, the provision of equipment and use of funds; and the Commission shall comply with such directions.  (2) In carrying out the measures of re-organization or the works of development as to involve a substantial outlay on capital account, the Commission shall act in accordance with a programme approved, from time to time, by the Minister. (3) In the exercise of its functions in relation to training, education and research, the Commission shall act in accordance with a programme approved by the Minister.

“(4) The Commission shall afford to the Minister information requested by him with respect to the functions and business of the Commission and shall furnish the Minister with annual estimates, and any returns as the Minister may require. (5) The Commission shall provide the Minister with the facilities as will enable the verification of information furnished in pursuance of this section. (6) The power of the Minister to give directions to the Commission shall include, but not be limited to, giving to the Commission directions as to – (a) the disposal of capital assets; (b) the application of the proceeds of the disposals. (7) Any direction given under subsection (6) may require the whole or any part of the revenues of the Commission to be paid into the Consolidated Fund”. 

But it is not only in that section that the minister’s powers have been removed, as perusal of other sections, such as under the functions of the commission, would show the same such as, among others, that he or she  is no longer responsible for reviewing approving or rejecting budgets by a licensee.

While the Commission   advises and provides technical support to the Minister, the Cabinet and other government entities in the negotiations of petroleum agreements and the granting, amendment, renewing, extending, and revocation of licences, it has been cut from advising the Minister in the negotiation of petroleum agreements. That role, this newspaper understands will now go to the Department of Energy.

 Ensuring compliance with fiscal metering requirements in petroleum production activities and ensuring accurate calibration and certification of equipment used for fiscal measures for petroleum activities have also been taken out.

Instead, the bill has been revamped for the Commission to, “assure the accuracy and integrity of metering and measuring of petroleum production, transportation, storage and delivery to allow for estimation and audit of cost oil or gas due to operators and royalty, profit oil and/or gas due to the State in collaboration with the Ministry responsible for Finance and the Guyana Revenue Authority, and be responsible for the final approval of the exercise…”

And where it was said that the discharge of any function by the Commission under the Act or any other law is subject to the approval of the Minister, that clause has also been deleted.

A commentary by the World Bank that has been shared with some stakeholders states that “Considering the context of the country, we support for Guyana the creation of a Petroleum Commission as a separate body related to the MNR (Ministry of Natural Resources)  since we perceive it to be an important move towards transparency and efficient management of petroleum resources. The main concepts contained in the Petroleum Commission Bill generally correspond to the good practice applicable to the creation of a Petroleum Commission in a new oil producer country with a few exceptions…”, it says.

It added that, “In addition, the existing Petroleum (Exploration and Production) Act, Cap. 65:10 of 1986 and the related Regulations of 1986, as amended, along with the model production agreement, should have been revised prior to drafting the Petroleum Commission Bill, since the existing legal framework is to a certain extent outdated. For example, petroleum activities under the Petroleum E&P Act of 1986 do not sufficiently cover pipelines and decommissioning activities. This explains why the Bill – which is based on the existing legislation – essentially only addresses exploration, development and production of petroleum in Guyana. Local content is also only briefly mentioned in the Act.”

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