The Inter-American Development Bank (IDB) on Thursday approved a US$11.6 million loan for Guyana which will go towards a project designed to support the strengthening and sustainability of the energy sector here by contributing to the institutional development of oil and gas governance and cleaner energy sources for electricity generation.The specific objectives of the loan programme are first, to develop a management and planning framework for Guyana’s oil and gas sector; and second, to contribute towards the development of a policy framework so that Guyana may diversify its electricity generation matrix using cleaner or renewable sources.“Guyana’s new energy scenario, which will likely yield significant revenues for the Government, represents a transformative shift in Guyana’s development trajectory. It embodies a crucial and unprecedented opportunity for economic growth and sustainable development,” a statement from the IDB added.It was further stated that the conversion of short-term oil wealth into long-term, well-being hinges on the capacity of the Guyanese Government to adequately manage this new sector and enact productivity-enhancing reforms.The IDB said if handled well; it can boost the overall standard of living for the country. However, there is considerable work to be done so that Guyana can enjoy the benefits of its recent – and potential – oil and gas wealth.The institution also highlighted that too often resource-rich countries have become or remained poor as a result of inadequate resource management. Hence, there is an urgent need to improve the governance of Guyana’s oil and gas sector ahead of production in 2020.The agreed-upon policy commitments of the first tranche of the programme were geared towards establishing a department of energy within the Ministry of the Presidency to take over responsibilities related to the governance and development of Guyana’s oil and gas sector.The second commitment was to approve the department draft roadmap to develop Guyana’s oil and gas institutional framework, and; design of a model contract for future Production Sharing Agreements (PSA) by the department and presented to Guyana’s Ministry of the Presidency.Now that the second tranche has been disbursed, the Government will now have to ensure that the Department functions are placed in a manual establishing its organisational structure, budget and staff allocation, approved by the Ministry of the Presidency.Additionally, it was be tasked with establishing a set of protocols and mechanisms for contract management; and an oil and gas depletion policy designed by the Department and presented for approval to the Ministry of the Presidency.Finally, the programme will also aid Government with the development of a policy framework to diversify and promote the sustainability of Guyana’s electricity generation matrix.The loan is funded in two components totalling US$11.64 million. The first component will total US$5.82 million from the IDB’s ordinary capital; disburse within two years, with a grace period of five and a half years, and an interest rate.The second component will total US$5.82 million from the IDB’s concessional ordinary capital; disbursed within two years, with a grace period of 40 years, and 0.25 per cent interest rate. The executing agency will be the local Finance Ministry.