Contrasting approaches to Esso and to local investors

Every Man, Woman and Child Must Become Oil-Minded (Part 63)

Introduction

It has been nearly a month since the last column appeared on October 19 under the title Complex for the White Man, Disdain for Locals. Recent developments have lent an aura of prescience about that column as we witnessed and contrasted the arrogance and unlawful behaviour of Minister David Patterson to the Berbice Bridge Company Limited, to the “softly, softly”, overly respectful attitude to ExxonMobil by the Government. The Government’s apparent obsession with the Ramroop Group’s involvement in the Bridge Company blinds it to the fact that there are more than twenty other domestic investors in that company, including Pension Schemes, Trade Unions, financial institutions and commercial operators. In fact, the single majority interest in the Bridge Company is held by the National Insurance Scheme while the Chairman of the Board of the Bridge Company is the Chairman of the NIS!

Of course, I believe that the Company was ill-advised to announce its unrealistic, uneconomic and unpopular toll increase. And of course, I believe that there were features of the Bridge Concessions that were too generous to the bondholders who were paid interest which was difficult to sustain and which in fact appears to have been a major contributor to the cash flow difficulties which led to the government’s intervention. I believe too, that the request by the directors for a two decades extension to the concession period was unnecessary, and played into the hands of the Government which has failed to keep its promise to drastically reduce tolls.

Muscular arrogance

So Minister Patterson decided that with Local Government elections around the corner, he would not only take the company on but would do so unconstitutionally, unlawfully and clumsily. It has been three years since Ram & McRae submitted proposals to the Minister of Finance for the resolution of the impasse at the Bridge with recommendations that are as relevant now as they were then. Whether it was as a consequence of lethargy, indecision or for any other reason, the Minister did not act and, to that extent, practically brought about the debacle leading to the “temporary takeover” of the Bridge. 

One hopes that the Local Government Election results for the Government in general and the Alliance For Change in particular will cause some sober reflection and humility on the part of the Government and of Minister Patterson as the subject Minister. The fiasco could not have come at a worse time as the economy continues on its sluggish path while tax revenues, counter-cyclically, increase. It has come too at a time when the widely publicised Doing Business Index shows Guyana slipping a significant eight places in 2017 after a gain of sixteen places in 2016. Ministers do not seem to appreciate the harm they are inflicting on this country because of arrogance, incompetence and inaction.

The Bridge Company has disclosed that it made several approaches to the Minister but was ignored. Yet, this same Minister, along with the four other Ministers comprising President Granger’s Quartet, had no problem in going to ExxonMobil’s Houston’s Office for reasons that are yet to be explained to the Guyana public. If this is not a demonstration of one standard for locals and another for foreigners, it would be nice to know what is.

What a difference

Meanwhile, Guyana’s new oil czars have carefully managed their public comments, implicitly protecting the Esso’s Petroleum Agreement from the barest hint of a criticism. Unwittingly, Dr. Mark Bynoe, the top czar, helped to feed the perception of double standard by which foreigners and locals are judged when he was asked about the stabilisation clause at a press conference he hosted. For him, the stabilisation clause, which effectively cedes Guyana’s parliamentary sovereignty, is necessary because our “complementary legislation may not be as robust as it ought to be”. Did our Ministers not realise that “complementary” factors were the same reasons why the Bridge Company investors received special tax concessions?    

Dr. Bynoe, who is a newcomer to petroleum, was also defensive – again implicitly – of the post-discovery 2016 Petroleum Agreement signed by the Government giving control to Esso over a huge area of offshore Guyana spanning from Suriname to Venezuela. In his public comments, Bynoe has been particularly careful to avoid any comments on the 2016 Agreement, preferring to deal with important but softer issues such as corrupt behaviuor for which Guyana has boasted it has signed on to the Extractive Industries Transparency Initiative (EITI); nebulously talking about the evolution and the “contextualisation” of the Exxon Agreement, whatever that means, and future licensing rounds. 

The hypocrisy assumes new heights however in the pronouncements by Bynoe’s Oil and Gas Advisor Matthew Wilks, whose responsibility it has been disclosed, is in contract administration and management. Wilks, in his first public foray, decided to lecture Guyanese about the sanctity of contracts, revealing to us that “investors are watching what is happening with contracts and the whole Guyanese approach to the sanctity of contracts” and that if we start unilaterally trying to change contracts, we will frighten investors. I find such comments patronising and insulting and never thought we would see the return to our country of such condescension.   

For reasons that are as clear as they are obvious, the same yardstick does not apply to indigenous investors.  

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