The 2021 Resource Governance Index by the Natural Resource Governance Institute (NRGI) has placed Guyana’s oil and gas industry in a ‘weak’ performance band with a score of 55 out of 100 points.
According to the NRGI, the score and placement of Guyana’s oil and gas sector in a ‘weak’ performance band is due to the fact that the South American country is a new fossil fuel producer and is currently still developing an institutional framework to successfully govern its oil and gas sector.
The NRGI in its assessment of Guyana’s oil and gas sector identified weakness in value realization, revenue management and an overall ineffective enabling environment, urging the government of Guyana to prioritize the development of a robust resource governance framework.
In terms of value realisation, revenue management and enabling environment, Guyana’s oil and gas sector scored 53 points, 56 points and 57 points respectively.
On how to improve upon its score on the Resource Governance Index, the NRGI made the following recommendations to the government of Guyana:
- The Ministry of Natural Resources should expedite the update of the Petroleum Act, aiming for the adoption and enforcement of competitive and transparent licensing processes to build public trust and strengthen accountability mechanisms.
- The Ministry of Natural Resources should continue disclosing contracts and maintain an up-to-date registry of licenses in line with EITI commitments.
- The Ministry of Finance should lead a comprehensive redesign of Guyana’s fiscal framework and prioritize the adherence to a fiscal rule to prevent detrimental management of resource revenues.
- The National Assembly, the Ministry of Natural Resources, the Guyana Energy Agency and the Ministry of Environment should prioritize a consultative discussion around Guyana’s oil and gas sector and its role in the energy transition, to adapt the institutional framework to the challenges of the changing global environment.
- The National Assembly, the Ministry of Natural Resources and the Ministry of Finance should strengthen the Natural Resource Fund, to ensure transparent and accountable practices that contribute to successful revenue management. If the government decides to amend or repeal the related legislation, civil society actors and other stakeholders should be invited to actively participate in the process.
The 2021 RGI assesses how 18 resource-rich countries govern their oil, gas and mineral wealth. The index composite score is made up of three components. Two measure key characteristics of the extractives sector – value realization and revenue management – and a third captures the broader context of governance — the enabling environment.
These three overarching dimensions of governance consist of 14 subcomponents, which comprise 51 indicators, which are calculated by aggregating 136 questions.
