Dear Editor,
I thank Mr. Joel Bhagwandin for revealing critically vital information in “Vreed-en-Hoop shore base is not a public-private partnership” (March 26) that remained unknown till now. Bhagwandin’s divulged explanatory information of the shore base financing was never told to the public by the government or by Exxon or by the private owners of the base. By design or error, the divulgence of such essential information about the Vreed-en-Hoop shore base raises more questions than answers provided. It also suggests, at a minimum, a tacit agreement, if not outright conspiracy, between the private owners of the base and Exxon, or worse, a directive from a third party (government?) to favour this particular chosen private shore base. A Commission of Inquiry will clear up issues pertaining to the arrangement of the project since it involves state assets (river location and cost oil).
Bhagwandin stated the Vreed-en-Hoop shore base is not a private public partnership but a private investment based on private investor equity. And we learn that the bulk of the investment is from Exxon, while the base is owned by the private equity group, NRG Holdings and Jan D Nul, a Belgium Company. SN reported (Apr 13, 2022) that NRG Holdings comprises three local entrepreneurs – gold miner Andron Alphonso of ZRN Investment Inc.,; Nazar ‘Shell’ Mohammed of HADI’S World Incorporated, and Deygoo-Boyer of National Hardware Guyana Ltd. Other media reports stated that the investors would put in a combined US$50 Million for construction of the projection. Exxon stated it would be a US$600 M project as per report in SN April 6, 2022. It means, therefore, that Exxon is funding over 90% of the project.
Bhagwandin stated the Exxon funding is “advanced pre-rental payments” for usage of the base. Something seems amiss about this business practice. It is unheard of – the extent of the funding from the major funder as advanced payments for services. It is not good business by any major funder or investor. It raises suspicions about transfer of state wealth to a private group. Why would an oil giant, or any business, fund a project covering 90% of its cost and then hand it over to private shareholders who put in less than 10% equity? Why doesn’t Exxon simply own it or let the government own it since Exxon (and the government) is funding almost all of the costs from cost oil (advance rental payments)? Even if Exxon is funding 50% of the project through advance rental payments, equity must go to the state as it is Guyana’s oil revenue funds that are being used to build it. This project needs a thorough joint parliamentary-civic investigation!
For simplicity for public understanding, Exxon builds the base with projected rental payments and hands it over to private owners who hardly put in any investment. It is indeed a very generous offer to the private owners. Why does Exxon stop its generosity there? Why not build similar projects all over the country and hand them over to private businesses or individuals? Why not give the same offer to every Guyanese? I would like to own a massive office building and rent it to Exxon under advanced rental payment. I will put in 10% investment. I invite Exxon to build it ASAP. It will be on my own land on the East Coast, not state property at the mouth of the Demerara River.
Bhagwandin further disclosed in his missive that he worked on the development plan for the project back in early 2021. The proposed need for a shore base was not advertised by Exxon until late 2021. It seems, therefore, that work on the Vreed-en-Hoop actually began long before Exxon publicly expressed a need for the base. Exxon did not announce an agreement for construction of the base till April 2022. Bhagwandin’s revelation of information suggests some kind of behind the scene agreement or conspiracy to fund a privately owned base with Guyana’s oil revenues as part of cost oil. Was there insider information that led to the company starting work early on the project? If the preceding is correct, it is fraudulent and illegal and a disadvantage to other prospective shore bases (like the one that had commenced construction on West Bank near Versailles, TriStar Inc oil and gas shore base facility, long before the public came to know of the proposed Vreed-en-Hoop base).
This definitely is worthy of an independent judicial, if not parliamentary, investigation. Any other proposed shore base (On the West Bank and East Coast) that was disadvantaged (if by conspiracy) should seek monetary compensation. Commenting on the funding of the project, Bhagwandin said it involved a lot of financial risks. This is contradicted with the fact he revealed that the project is funded by Exxon with advanced rental payment paid up front as the base is being built. Therefore, no financial risk is involved as Exxon agreed to fund it with advanced rental payment. Exxon’s business in Guyana is our (public) business. The fact that Exxon is paying for construction and use of the Vreed-en-Hoop base under “cost oil” makes it a public, private partnership in which Guyana must have equity. Guyana’s oil revenues (90% of the costs) is used to pay for the base (90% of costs); the State therefore has equity in it. Guyana should have similar equity proportional share based on the percentage of financial investment in it.
There is another reason why the State should own this project. It is being built on public land. The private company is not paying for the land. Given it is public property and public funding through Exxon cost oil, the project must belong to the State. One other point on this project. It has disrupted lives of the people in the surrounding area and in shipping traffic. Thousands have lost their income. Government offered a one-time small compensation that would not sustain their livelihood for more than a few months. In fact, whatever was offered last year was already spent out. The people who are affected by the construction of the shore base deserve ongoing continuous payment until such time that they can resume normal fishing business that may take several years. Businesses affected by the construction and location of the shore base are also deserving of compensation. They should consult a lawyer. The Vreed-en-Hoop shore base is in need of an independent commission of inquiry or parliamentary investigation on equity financing (through Cost Oil) and ownership.
Sincerely,
Isiah Francis
