Budget 2020 to re-align productive natural resources sectors
– small miners and loggers benefit from incentives, sector strategies aligned for prosperity
Minister of Natural Resources, Hon. Vickram Bharrat, MP, in his Budget 2020 Presentation in the National Assembly on September 15, 2020, outlined the sector’s strategic vision and plans for the prosperity of all Guyanese.
This, he said, is in keeping with the Budget 2020 theme: “Our Plan for Prosperity: Protecting our People in a COVID-19 Environment; Strengthening Democracy and the Rule of Law; Incentivising Economic Growth and Job Creation; and, Enhancing Welfare”.
Minister Bharrat said the Budget was crafted to launch the nation back on its positive development trajectory, after the hardships imposed on the nation under the last administration and the stagnation of the economy. As such, in keeping with the PPP/C’s Manifesto plan for the next five years to rebuild Guyana, a series of measures was considered for the natural resources productive sectors.
The Minister emphasised that the current administration conducted countrywide budget consultations to listen to the concerns of all Guyanese. In fact, the Ministry held virtual meetings and visited communities in keeping with COVID-19 guidelines, to interact with small miners, loggers and relevant stakeholder associations across the sectors.
Most notably, in just 38 days, the government delivered on its Manifesto commitment, which included the removal of value-added tax (VAT) on machinery and equipment.
“We are committed to working with the stakeholders in this sector so they can re-tool and re-capitalize their operations. In addition to that measure, we have provided tax concessions on all-terrain vehicles (ATVs), removed VAT on all exports, removed VAT on hinterland travel; all of which will benefit the forestry sector. Lastly, but certainly not least, the amendment to the Log Export Policy will allow sawmillers to export logs, resulting in a significant boost in the production for the industry. It is the government’s intention to maximise our value-added forests products, so this initiative will ensure exports of lesser used species,” Minister Bharrat said.
The Minister, in his presentation, said that the Guyana Forestry Commission was bankrupt and unable to pay salaries to the 417 staff, remit taxes and dues to Guyana Revenue Authority (GRA) and National Insurance Scheme (NIS), pay the Guyana Power and Light (GPL), and unable to maintain vehicles to enhance forest monitoring, resulting in significant loss of revenue through illegal logging.
As an immediate measure, the government, in less than one month, has been able to bail out the Commission by disbursing GYD$350 M to cover operational costs and wages for the remainder of 2020 (and to pay bonus to staff for the year 2018), the Minister said. He also expressed his commitment to strengthen the competence and expertise of the Commission with an emphasis on enhancing its monitoring and enforcement capabilities to confront corruption and illegal logging.
In relation to the mining sector, Minister Bharrat noted that the various sub-sectors within the mining industry, gold, bauxite and diamond continue to be the strongholds in the industry while the non-traditional minerals sector remains underdeveloped. As such, efforts will be made to repair, re-structure and strengthen the Guyana Geology and Mines Commission (GGMC) to become more pro-active. The reformed organisation will be more environmentally sensitive and technologically advanced with experienced leadership to deliver its mandate. This is currently being done through a consultancy which is expected to be completed in 2020 and slated for implementation in 2021.
Additionally, Minister Bharrat said there has been many changes in Guyana’s economic, environmental, and social landscapes over the last few decades since the Mining Act (1989) and Regulations were crafted. As such, there is need for a more modern legislative regime which enables improved governance and the development of a responsible mining sector.
“In 2020 – 2021, the Ministry of Natural Resources will task the Guyana Geology and Mines Commission with identifying the legislative gaps and prioritise those amendments that will address the loopholes and challenges facing the Commission in fully executing its mandate,” Minister Bharrat Said.
As a high priority, “the Ministry of Natural Resources intends to re-focus its attention on Hinterland Road Development to ensure miners and loggers have access to their mineral properties and forest concessions with their equipment and supplies, thus reducing operational costs. In the past, the responsibility was shifted to the Ministry of Public Works; however, it is an urgent need for the sector, which can benefit more through the focused attention from the Special Projects Unit within the GGMC,” the Minister stated.
The Ministry of Natural Resources has projected for the year 2020, a gold declaration target of 611,000 ounces representing a four per cent decline from the 2019 declaration, Minister Bharrat said. Although the mining community has been impacted by the COVID-19 pandemic, particularly when travel restrictions were implemented in Barima-Waini (Region One), the Minister remains confident that both gold miners and dealers will ensure set targets are met in December.
Further, Minister Bharrat commended small and medium-scale miners for contributing approximately 80 per cent of gold declaration thus far as the large-scale operators are faced with challenges. One such company, is Guyana Goldfields which was recently acquired by a Chinese investor, and Troy Resources, which reported that its management personnel is being affected by the COVID-19 guidelines, particularly international travel.
Under the new administration, the Department of Energy will be supervised by the Ministry of Natural Resources. Previously, the Department under the Ministry of Presidency was engaged in policy direction, technical and operational capacities and basically operated without guidance. However, under the PPP/C administration, Minister Bharrat said the Department will be converted into a professional technical unit to manage this new sector. Eventually the Department and the Petroleum Department at GGMC will be subsumed into the Petroleum Commission.
The Minister also reminded the National Assembly that Guyana has had its 18th offshore oil discovery in the Redtail-1 exploration well in the Liza-1 Field. This will add to the estimated recoverable resource of more than eight billion barrels from the Stabroek Block. The Liza-1 Field has yielded almost US$150 Million from three completed lifts with the 4th lift scheduled later this year. Meanwhile, the Liza-2 Field is expected to start production in early 2022 from the Liza Unity FPSO with a capacity to produce up to 220,000 barrels per day and, once approved, the Payara Development will see FPSO Prosperity producing 220,000 barrels of oil per day.
Minister Bharrat explained that His Excellency Dr. Mohamed Irfaan Ali has mandated that, in the interest of transparency and accountability, a review of the Payara Developmental Plan be conducted through a technical assessment before granting the licence. This assessment was undertaken by a team of international experts which the Government of Canada has facilitated. As such, the Minister reported that a Draft Licence between the Government of Guyana and ExxonMobil for the third oil field, Payara is being examined. The technical and legal teams are currently engaged in discussions to finalise the licence in the coming weeks.
Further, the Natural Resources Minister stated, “Although oil exploration and production remain the main focus for this emerging sector, the Government of Guyana will be pursuing the option of utilizing the natural gas that is being extracted from the reservoirs as an alternative for power generation onshore. We recognized that this would be a costly and highly technical initiative and as such, we will be seeking the best advice from international experts. We will be establishing a Gas to Power Working Group to guide this process forward.”
Meanwhile, Minister Bharrat reaffirmed the government is committed to strengthening institutional capacity and adopt a strong legislative and regulatory framework for the sustainable management of Guyana’s natural resources through the programmes, plans and projects outlined in Budget 2020. The Ministry of Natural Resources will continue to engage international experts and agencies, and developmental partners for the development of regulatory framework, prudent fiscal management policies, capacity building, and transparent processes for good governance.