As the new year dawns, the APNU+AFC government must be commended for its decision, as announced by Minister of Natural Resources Raphael Trotman, that all contracts henceforth between the government and companies will be made public. Once adhered to this will be an epochal development in transparency and will constitute a levelling with the public which has been too often treated with disdain by governments here. The publishing of contracts will also help to reduce the risk of corruption and under-the-table deals and eliminate the haze that accompanies monumental transactions such as the one first concluded in 1999 by the Janet Jagan administration with the ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).
It should however be noted that the government resisted for months, tooth and nail even in the face of advice from its own petroleum adviser and others that the contract with EEPGL should be made available. What remains unsettling is that spurious and untruthful reasons were issued by several senior government officials for not releasing the contract. This has immeasurably damaged the credibility of the Granger administration, a breach in public trust that won’t be healed by the release of one contract. Anti-corruption and good governance campaigners like Messrs Christopher Ram and Anand Goolsarran, civil society groups, letter writers and the media also played a major role in the government decision to publish. It underlines the effectiveness of civism and why citizens must not relent or feel despondency over their individual efforts. They must all continue to play their part even if impact may not be immediately evident.
It should also be recognised that the intention to publish all such contracts is a sharp departure from the outlook of its predecessor, the PPP/C which only grudgingly provided some documents when under pressure as it was during negotiations for the Amaila Falls Hydropower Project. The previous government showed no recognition that transparency needed to be the guiding principle in modern governance standards. Nowhere was this more glaringly evident than in the transactions between the former government and the China-backed companies that entered into large infrastructural projects.
With the petroleum agreement with EEPGL having been released, it is now clear that a gigantic task faces the country in ensuring that Guyana’s interests, economic and environment, in particular, are preserved. A report by an IMF Fiscal Affairs team has already adverted to serious risks to Guyana based on what was publicly known about the agreement and the features of the model legislation. This team was not granted a copy of the petroleum agreement.
When he was challenged at a press conference on Friday to identify who negotiated the new 2016 agreement on behalf of the country, Minister Trotman listed the point man as the head of the Petroleum Division of the Guyana Geology and Mines Commission (GGMC), Newell Dennison and his team. Mr Dennison and his team may no doubt be competent at what they do. However, by no stretch of the imagination will they be considered to be equal to the task considering the expertise and resources available from EEPGL’s parent company ExxonMobil which has been known to throw its weight around and is continuously under the scrutiny of prosecutors and watchdogs in its own country and other jurisdictions in which it operates. This is precisely why significant problems have already been underlined in the present contract.
In his ongoing oil and gas column in Stabroek News, Mr Ram has homed in on the significantly expanded stability clause in the 2016 petroleum agreement.
In, particular, he said “If Guyana decided to make any amendments to its laws, whether through the amendment of existing laws (including the hydrocarbon laws, the customs code, or tax code) or the enactment or new laws, any of which has a material effect on the oil companies, the Government is required to take prompt and effective action to restore the benefits so lost. The new Article requires that the foregoing obligation of the Government includes the obligation `to resolve promptly by whatever means may be necessary (my emphasis) any conflict or anomaly between the Agreement and any new or amended legislation, including by way of exemption, legislation, decree and/or other authoritative acts.’
“Article 32.4 provides, inter alia, that any delay by the government to respond to any notification from the contractor that they may have suffered any adverse effects can result in the contractor taking the matter to arbitration. In such a case, the arbitral tribunal is authorised to modify the agreement to reestablish the economic benefits under the Agreement to the Contractor. Where such restoration is not possible, the tribunal has the power to award damages to the Contractor that fully compensates for the loss of economic benefits under the Agreement, both for past as well as future losses.”
Might these clauses in the stability article not also impinge on environmental legislation here which has to be bolstered to make EEPGL fully accountable and liable for any pollution or damage from its upcoming extraction operations?
To protect this country’s vital interests, the government has to have the best advice on agreements such as the one with EEPGL. Guyana has to approach these contracts with the full recognition that its non-renewable natural resources could be at risk of abuse, the returns to the country attenuated and that it can face a series of unanticipated setbacks by virtue of the unevenness of the negotiating process.
The government should invest a portion of the signing bonus in the recruiting of experts in the petroleum sector who have not been substantially connected to ExxonMobil, its subsidiaries or its traditional partners in the industry, to advise on the way forward with this questioned petroleum agreement and to keep ExxonMobil and EEGPl on the straight and narrow path in relation to their contractual obligations, environmental protection and their general conduct.