Why Should Guyana’s President take Responsibility for the Oil Sector?

So we have all just read, that the Minister of Natural Resources, Raphael Trotman has handed responsibility of the Petroleum sector to President Granger. This is not about general good governance. This is about how to get the economic decision chain right and managing that chain of economic and policy decisions around oil and gas. Economic and policy decisions around oil and gas depends upon a tripod of politics and requires a very high level of political activity which is commonly called the AUTHORIZING ENVIRONMENT. This tripod of politics includes rules, institutions and citizen understanding.

The first part of the tripod is rules. You need distinctive rules that address those key decisions. Second you need institutional capacity to implement those rules and third these institutions must be supported by a critical mass of citizen understanding. Now that Guyana has made a sixth discovery, it now needs a rules based system which says the government can’t just do a deal with whatever company shows up at the door of the Ministry of Natural Resources, there has to be an orderly system for selling the rights to resource extraction and that is a transparent process of competition or a policy decision which determines saving out of natural resources revenues. So that’s an example of a legislated rule. But rules need institutions – a team of people, public officials with a mandate – that actually understand rules and policies and has the capacity to implement them other wise what you have are institutions that are paper tigers. These rules and institutions then need to be scrutinized by a critical mass of citizens who understand the issues.

There’s a large waterfront of both rules, legislative and policy rules and institutions which have to be built and that takes us finally to the authorizing environment (view this video about understanding the authorizing environment), who’s going to do that? And the part of the tragedy, is that those decisions of managing natural resources are taken at too low a level of government. Since Guyana discovered oil, the implementing ministry has been the Ministry of Natural Resources but this Ministry has no competence in how revenues should be spent, invested or saved. The Ministry of Natural resources has no competence, no remit, no authority in this sort of investment process.

Guyana’s future is not investing in a lot of oil related activities like refineries, our future is in using those oil revenues to build a diversified economy, build a city and towns that functions well, get a transport system, a port system, an education system.

And so, the authorizing environment that builds and supervises the whole waterfront of laws and institutions that implement those laws, that authorizing environment has to be above the level of any particular ministry and certainly above the level of the Ministry of Natural Resources.

In the end, the only authorizing environment that can make sure that across the waterfront the rules are in place, the institutions are in place, and the critical mass of citizen understanding is built, the only institution that can do that is the Presidency. And so, what is needed is an authorizing environment, which is basically the Ministry of the Presidency plus the relevant ministers who span this range, the whole waterfront of decisions that have to go well in order for resources under the ground to be discovered and converted into sustained prosperity.

Watch this clip to learn more about the Decision Chain of Natural Resources.

About the Blogger


Kevin Bonnett is a leading development practitioner who has provided expertise in strategic development and public policy thinking, thematic sector mapping and analysis, strategic advice and relationship management in priority development areas of economic empowerment, the environment, private sector, crime & insecurity, water and sanitation, education, health sectors and governance among others to the Government of Guyana and some of the world’s leading international development agencies including the United Nations Development Programme, Delegation of the European Commission, United States Agency for International Development, Department for International Development, World Health Organization and World Bank.

Kevin holds a BSc in Public Management and Post Graduate Diploma in Development Studies from the University of Guyana and a Master’s Degree in Global Studies from the University of the West Indies. He also holds a Diploma in Anti-Corruption from the U4 Anti-Corruption Resource Center in Sweden and a Certificate in Natural Resources Governance from the Natural Resource Governance Institute, Columbia Center on Sustainable Investment and The World Bank and is competent in working with UK Ministers and Parliament through training and attachment with the London School of Government.

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