Govt’s silence on oil-related concerns can hinder membership to global transparency body

Jul 10, 2017 News

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The coalition government’s silence on matters relating to the deal struck with oil giant ExxonMobil can put a dent in efforts to secure membership with the Extractive Industries and Transparency Institute (EITI).
EITI is a non-profit organization registered in Norway. It is respected as a global standard to promote the open and accountable management of extractive resources. It seeks to address the key governance issues in the oil, gas and mining sectors, all of which Guyana has.
The government is actively looking to join the EITI. To this extent it has announced plans to engage the public.
EITI has a five-step sign up process that countries must go through on the road to the membership of the recognizably important body. That five step process is just the first phase. The five steps include: government engagement, company engagement, civil society engagement, the establishment of a multi-stakeholder Group then agreement of an EITI work plan.
Engagement with civil society is of utmost importance to the EITI since it focuses on transparency.
EITI says, “The participation of civil society is fundamental to achieving the objectives of EITI, including Principle 4 which states that public understanding of government revenues and expenditure over time could help public debate and inform choice of appropriate and realistic options for sustainable development.”
In a published advertisement, the government said that the Guyana EITI (GYEITI) through the Ministry of Natural Resources will be conducting a series of outreach events during this month. The outreaches are scheduled for Corriverton, Bartica, Linden, Charity and Georgetown.
The advertisement outlines three objectives: To engage and provide to a wide cross section of Guyanese, relevant information about EITI, its implementation and benefits for Guyana; create a platform for good governance and management of Guyana’s natural resources and enhance communications efficiency between GYEITI and citizens.
However, it is unclear what form this engagement will take. From all indications full disclosures will not be made during these outreaches.

Efforts by civil society so far to get information out of the government about matters related to the oil deal have been futile.
The Transparency Institute of Guyana Inc. (TIGI) tried to get information out of the government in this regard. It had written to the Minister of Natural Resources, Raphael Trotman, seeking information. However, the body had to turn to the media after Minister Trotman refused to even acknowledge receipt of the letter. To this day, the body cannot get the information it sought.
The Guyana Oil and Gas Association (GOGA), also another non-governmental organization wants information from the government that it is not getting.
One of the Association’s Directors and prominent lawyer, Nigel Hughes, delivered a presentation in Trinidad and Tobago. He noted that the government has failed to give information about key concerns of the Guyanese people.
These include whether there is a ceiling for cost recovery in any given year. Yearly cost recovery ceiling would refer to the amount of money which government and ExxonMobil agree that the company will take out from the yearly revenues generated in order to recover its investment.
The amount of money agreed on will reflect in Guyana’s yearly piece of the pie. It has already been established that Guyana is supposed to get 50 percent of the profit and two percent royalty.
Case study: If ExxonMobil receives $100 per year and takes out $70 for cost recovery purposes that would leave only $30. Two percent will then have to be taken out for royalty and the remainder is to be divided 50-50. Therefore, cost recovery ceiling is an important factor in getting to understanding just how much Guyana will benefit yearly.
Hughes also pointed out that there has been no indication whether cost recovery is a percentage of revenue.
Hughes noted, too, that Guyanese are yet to be told how the government intends to validate the costs ExxonMobil has incurred. This is important, as the possibility of inflated cost cannot be ruled out.
Hughes said, “There is also an absence of any information on key variables including life of the project in years, the total investment, the annual fixed cost per year, estimated cost of a barrel of oil for the project, and whether any duties, tax concessions were granted.”
During his presentation, Hughes spoke about the call made by the Working People’s Alliance (WPA) for more information to be put in the public domain.
He said, “One of the parties in the Coalition called on the government to publish the contract.”
He said that the Chairman of the WPA, in a letter to President David Granger said, “There is no justifiable reason for not publishing this contract. Seeking public comment on it is our democratic obligation. And engaging the widest possible sharing of views can only help the coalition government to make wiser decisions.”
Hughes is not the only one with these concerns as many have been expressing similar concerns in the letter pages of the various newspapers.
The media, which also forms part of civil society, has been asking questions but still cannot get information. For instance, the Minister of State was asked to disclose the names of the lead negotiators that have represented Guyana’s interest so far. His response was, “Those names are still under wraps.”
According to EITI, transparency in the extractive sector means, “Revenues generated from the extraction of natural resources are available for the public to see.”
Guyana’s membership to EITI is important for transparency. President Donald Trump has told American companies that they do not have to make disclosures in countries in which they are operating.
EITI’s policy is that “all companies (regardless of whether they are EITI Supporting Companies) operating in a country implementing the EITI are required to disclose how much they pay to the government.”
EITI web page listed some of the benefits of membership. It said that governments benefit from following an internationally recognized transparency standard that demonstrates commitment to reform and anti-corruption, and leads to improvements to the tax collection process and enhanced trust and stability in a volatile sector.
Companies benefit from a level playing field in which all companies are required to disclose the same information. They also benefit from an improved and more stable investment climate in which they can better engage with citizens and civil society.
Citizens and civil society benefit from receiving reliable information about the sector and a multi-stakeholder platform where they can better hold the government and companies to account. Energy security is enhanced by a more transparent and level playing field. This increased stability, encourages long-term investment in production – and thus improves the reliability of supply.

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