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Ring-fencing provisions necessary…Guyana must safeguard itself – GRA Boss
The Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia, firmly believes that adequate ring-provisions are indeed necessary when it comes to the oil and gas sector. In this regard, Statia opined that Guyana must safeguard itself.
GRA Commissioner General, Godfrey Statia
The ring-fencing provision ensures that USA oil giant, ExxonMobil, cannot transfer the expenses incurred at one well to another. In Guyana’s contract with ExxonMobil, the mechanisms to safeguard against this are absent.
GRA’s Commissioner General, Statia, notes, however, that the effects can be minimised with the right regulation, separation provisions and controls, and continuous audits and reviews. He said that there must be identification and isolation of activities, assets, costs and revenues for each well.
Statia said, “Sure, Guyana must be on its guard. The principle (of ring-fencing) exists in certain industries in Guyana already and GRA is taking steps to deal with this as it relates to companies which are in the habit of transferring costs as it relates to sister and related companies…”
CLOSING LOOPHOLES
The International Monetary Fund (IMF) has found a number of loopholes for abuse in Guyana’s Production Sharing Agreement (PSA) with ExxonMobil.
But the Government believes that there is no need for alarm or worry as several international bodies, the IMF included, are lending tremendous support to help Guyana remove every possible chance for exploitation by the operator.
This was noted recently during a press conference by Minister of Natural Resources, Raphael Trotman. He was at the time responding to a question from this newspaper which was based on the disturbing findings of the IMF.
One issue that the IMF in a report points out is in relation to ring-fencing. The IMF said that in principle, the ring-fencing arrangement ensures that the government’s revenue from the Stabroek Block is calculated based on each field or well separately.
The Fund stated, “However, this is undone by the Production Sharing Agreement framework, allowing the contractor to allocate cost oil to any field within the contract area.”
Trotman said that on November 30, he and the Finance Minister, Winston Jordan, sat with IMF representatives and those issues were ironed out.
Trotman said, “We went through them with the Guyana Revenue Authority and others. The answer is that we are working. IMF, World Bank, the Caribbean Development Bank (CDB) and the Inter-American Development Bank are giving us tremendous support. And we are building capacity on a daily basis and hiring capacity and ensuring that we cover all that we are supposed to…”
The Minister said that with the help of those international agencies, Guyana will be in a position to tighten all loopholes.
He added, “We invited the IMF to tell us what we are lacking in this regard, so Guyana is not alone in this.”
(KIANA WILBURG)
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