Dear Editor,
Reference is made to Elson Low’s letter captioned, “Since the government has stated an intention to own the pipeline it must approach parliament for funding”, Stabroek News, January 12th, 2023. Low offered a counter argument to my response on the subject matter in which I rejected his assertion that the financing of the gas to shore pipeline infrastructure is unconstitutional. Having explained that this is not the case, Low is now arguing that because the Government will own the pipeline infrastructure, it must approach parliament for funding.
Low’s argument is weak and unjustified because, for example, the crude oil which ExxonMobil is extracting is not owned by ExxonMobil and its consortium partners. The crude oil is owned by the State, and based on the terms and conditions of the Production Sharing Agreement (PSA), the oil companies are contractors, not owners. They were contracted to explore, develop, and produce the oil and gas with their own capital (private capital): in this case it’s not just considered private capital but foreign capital as well. As such, they (the oil companies) are not required to present their exploration, development, and productions plans to Guyana’s National Assembly. Whatever amount of debt is employed to finance the oil and gas operations is repaid from cost oil.
That said, the financing that the Government is seeking from the U.S Exim Bank to partially finance the onshore infrastructure for the gas plant will have to be tabled in the National Assembly for prior approval because the repayment of this debt will be from the national treasury and not cost oil. The Economic Advisor to the Opposition Leader does not seem to appreciate that strictly speaking, it is the source of funding that determines at what stage all of the details on the project, including financing, would be tabled in the National Assembly, and whether prior parliamentary approval is required.
Low’s argument would have been meritorious if the funding for the gas pipeline was from Guyana’s share of profit oil and not cost oil; Editor, I hope this brings the much-needed clarity on this subject matter for the benefit of your readers.
Sincerely,
Joel Bhagwandin
