Keeping an eye on gov’t and ExxonMobil

On March 30th, Minister of State, Joseph Harmon announced that the US$18m signing bonus contracted with ExxonMobil’s subsidiary, EEPGL would be deposited into the Consolidated Fund before any disbursement is made.

It is a small victory for good governance and its advocates like Messrs Christopher Ram, Anand Goolsarran and Transparency Institute Guyana Inc among others. The clandestine assigning of this sum to an account at the Bank of Guyana was a gross violation of Article 216 of the Constitution which states clearly “All revenues or other moneys raised or received by Guyana (not being revenues or other moneys that are payable, by or under an Act of Parliament, into some other fund established for any specific purpose or that may, by or under such an Act, be retained by the authority that received them for the purpose of defraying the expenses of that authority) shall be paid into and form one Consolidated Fund”.

While the government will now be in compliance with the highest law of the land, ensuring transparency in the oil and gas sector will require arduous efforts by good governance watchdogs, other parts of civil society, the Opposition and Parliament. Neither the APNU+AFC government nor ExxonMobil has shown themselves to be trustworthy on this front.

Both agreed to keep the negotiation process for the 2016 Production Sharing Agreement hidden from public view even though there was a real danger – now realised – that the country and its citizens stood to lose enormously from an unjust and inequitable deal.

Both agreed to assign the US$18m signing bonus to an account at the Bank of Guyana though they had to be aware that this would be red-flagged as a violation of the constitution.

The government’s image as custodian of the interests of the country was further damaged by a junket by its senior ministers and others to the ExxonMobil headquarters in Texas.

The Granger administration’s handling of the oil and gas sector has stoked public doubt as to its commitment to good governance. It must now show, as it rolls out a restructured framework for oil and gas in the form of the Department of Energy (DoE), that it is intent on operating to the highest standards of governance and probity.

Whoever heads the DoE will have to be an expert with impeccable credentials in oil and gas and immune to any tendency by government bureaucrats to interfere and infect decisions with political considerations. The architecture of the proposed Sovereign Wealth Fund will also be a key test of the government’s willingness to assign its management to professionals and to insulate it from political control. Among other decisions, how the government decides to apportion the remaining oil blocks will provide great insight into whether it has learnt from its cavalier and grossly negligent handling of the 2016 PSA with ExxonMobil’s subsidiary.

As it relates to the fiscal trail leading up to first oil, the public will be interested in the performance of the Guyana Extractive Industries Transparency Initiative (GY-EITI).  Its stance on the US$18m signing bonus, the US$460m pre-contract costs claimed by EEGPL and scrutiny of other monetary flows will establish whether it is up to the task. Guyana desperately needs a third party to scrutinise intently the financial transactions of the state and ExxonMobil relative to the beginning of oil operations in 2020.

The careful examination of the sector is all the more important as ExxonMobil’s behaviour in other jurisdictions is suspect and raises concerns about how easily institutions here could be swept aside and undermined.

Several days ago, watchdog group Global Witness reported on ExxonMobil’s determined pursuit of an offshore Liberian oil block despite real concerns that the block might have been tainted by corruption. Not only was ExxonMobil not dissuaded by corruption concerns but its eventual acquisition of the block evinced signs of a clear intention to circumvent US laws that are intended to ring fence such transactions from corruption. A Canadian company was apparently used as a go-between to purchase the block and Exxon would later secure its interests in the block from the Canadian company.

The lack of concern by Exxon for conduct to the highest prudential standards in this Liberian deal and others is troubling and means that there is a real risk that aside from the sugar coating and its corporate social responsibility programme here, there is  the prospect of it employing unorthodox means to have its way. This must be rigorously guarded against.

There is a pressing need for civil society to pool its resources to rigorously examine all transactions in the deal with EEPGL and to be prepared for the others that will inevitably come along.

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