New legislation to guide investment of oil revenues – President Ali

Continued investment in Guyana, reduced energy costs, legislative changes to ensure the proper management of the oil funds among other plans would be possible with the adoption of a new low carbon strategy.

On Thursday, as President Irfaan Ali announced a four-month consultation on Guyana’s new Low Carbon Development Strategy, the Head of State said the new strategy is expected to deliver “broad-based development and prosperity at home,”, while it will continue to contribute to solutions to global problems. This makes the strategy similar to its sister strategy launched in 2009 by then President Bharrat Jagdeo. 

The LCDS 2030 sets out an updated vision for how the Government intends to drive the transformation of our country, President Ali said in an address.

The President listed four themes that are embedded in the strategy, among these are finding climate solutions, resuming work to build a global model for forest climate services, and employment of clean energy aimed at ensuring Guyana remains a low Carbon country.

 President Ali said his Government recognises the responsibility that comes with being an oil producer, “We are deeply aware of our duty to manage the industry carefully and strategically. That is why over the coming months, we will finalise the legislation to improve the Natural Resources Fund and embed world-class standards of transparency in our management of oil and gas revenues,” President Ali said. 

This Fund is expected to manage the revenue from the sale of Guyana’s oil. The President added that the new legislation will enable a certain amount of oil revenue to be invested in critical development priorities. The remainder of the revenue will be saved for the future, President Ali said too. 

“This means that over the coming decade, with resources from the oil and gas sector, we will make the highest level of investments in health and education that Guyana has ever seen. In the short term, investment in both health and education are critical to the recovery from the Covid-19 pandemic,” President Ali said.  

President Ali in his address said too that subsidies for fossil fuel production should be removed and the strategy addresses this. 

“The Government of Guyana supports calls for the elimination of such fossil fuel subsidies, especially in OECD countries where the subsidies are the most distorting, destabilise prices, and do nothing to reduce the carbon intensity of the world’s economy,” the Head of State said.

“Combined, these two policies can create a much fairer marketplace for oil and gas that is compatible with achieving the goals of the Paris Climate Agreement. Guyana will not shirk its responsibilities in such a marketplace.”

President Ali committed to ensuring that its oil and gas sector operates to international standards. “The Government is working to eliminate flaring from oil production, except in the case of genuine emergencies. When my Government took office in 2020, there were no safeguards in place to disallow flaring,” President Ali said, “As a result, we introduced one of the very few taxes on flaring in the world – where beyond the commissioning period, all flaring will be taxed at US$45 per tonne of carbon, along with the actual gas lost. For newly-licensed production, the tax on flaring will be accompanied by legal limits on the overall amount of flaring.”

President Ali also committed that his government will continue dialogue with oil producers to ensure that, alongside the above measures, exploration and production operations will continue to explore all opportunities for lower carbon technological innovation – including the use of renewable energy in oil production, Carbon Capture Utilisation and Storage (CCUS) and – when technologically viable – green hydrogen.

Consultations on this strategy is expected to start soon.