A contract was signed in June 2016 between the coalition government, ExxonMobil and its partners in the Stabroek block. Why did this contract dealing with the exploitation of the nation’s natural resources remain a secret for over a year? This does not augur well for the future transparency of the oil industry.
In Article 15 of the contract, Exxon is exempted from paying Corporation, Excise or Value Added Tax (VAT) on its earnings from petroleum. What is the reason for this? Foreign corporations doing business in United States must file corporate tax returns and pay corporate taxes to the United States.
Article 15.4 also provides for the government to pay the company’s income tax to itself. To facilitate this, the oil company has to submit tax returns to the government. This is blatantly awkward. Where in the world would you find the host government paying to itself the taxes for a US registered corporation doing business on its territory?
That’s not all. Article 32 stipulates that government cannot modify the contract or increase any fiscal obligation the company has under the contract. No matter what the circumstances – think of oil spills – the government is bound under this contract. In my deeply held opinion, this contract is a sell-out and worse, a humiliation of the Guyanese people.
If as Minister Trotman says, total revenue from one oil-field is $160 billion, does it not make sense to hire qualified and experienced accountants and lawyers in the oil business to negotiate on GoG’s behalf? Who are the folks who negotiated this deal for the Guyanese nation? Is it too embarrassing to reveal their names?
Why is this a sell-out? Let us look at the IMF report. Look at the graph ‘Pre-tax Project IRR’ which shows how well Guyana does when compared to Trinidad, Peru, Brazil, United States, Australia, Norway and Colombia. Guyana comes out at the very bottom. And as oil prices rise, most of the countries show a progressive rise in total revenues. Guyana is represented by a mostly flat line at the bottom of all the other countries and shows no rise.
It is not true that Guyana is a small country new to the oil business, and therefore must take what it is offered. It is rather what you negotiate and win at the bargaining table. Why is Hess liquidating its oil assets around the world and heading to Guyana – to invest in Guyana? Does Hess know something that the average Guyanese citizen does not know about his own country’s potential oil resources?