Chinese company approved for new oil export licence until 2025

Feb 03, 2018 News

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Chinese local investor, China Zhonghao Inc. of Land of Canaan, East Bank Demerara, whose export licence for oil expired almost two years ago, has been approved for one until 2025.

This information is in the Official Gazette dated January 13th, 2018.

The company, which has close relations to logging giant, Rong-An Inc, is associated with the Falls gas station at Land of Canaan, East Bank Demerara, with some large storage tanks and a wharf built to accommodate supply vessels.

China Zhonghao Inc. was the only company that was granted an export licence under the previous administration. It was reported that the licence had expired in 2016, but it appeared that the regulator, the Guyana Energy Agency (GEA) received an application and approved it.

The licence will expire on January 19, 2025, according to a notice in the Official Gazette.

“Notice is hereby given in accordance with Regulation 71(4) of the Petroleum and Petroleum

Products Regulations 2014 enacted under the Guyana Energy Agency Act 1997 (Act No. 31 of

1997) as amended by Section 4 Guyana Energy Agency (Amendment) Act 2004 (Act No. 3 of

2004) of all importers, wholesalers and retailers of petroleum and petroleum products, consumer

installations and bulk transportation carriers of petroleum and petroleum products as licensed by the Guyana Energy Agency as December 31st, 2014,” the Official Gazette said.

The notice was signed by Dr. Mahender Sharma, Chief Executive Officer of GEA.
With Guyana moving into oil and commercial production by 2020, it was unclear yesterday whether the Chinese company is preparing to capitalize. It is unclear whether any other applications for export licences have been filed at GEA.

Guyana is an importer of oil, with the export licence reportedly the first such one ever granted.

China Zhonghao also has licences to import and wholesale petroleum products.

The issue of the export licence was first raised more than two years ago, and it was disclosed later that an audit into the affairs of GEA revealed that China Zhonghao Inc. was granted a licence to export oil.

Former Prime Minister Samuel Hinds later took full responsibility for the granting of the licence saying that it was by no means an act of corruption.
Back then, Minister of Public Infrastructure, David Patterson, said that the company did not produce the necessary documents within the time given to do so.
“A company is given time to provide additional information that was outstanding. If it doesn’t, then the licence is deemed revoked or expired.”
He said that in the first place, the company did not have an oil exportation licence, as was highlighted in the audit report. Rather, what was granted then was a conditional licence and that was no longer in effect.
“The company was given a conditional licence which meant that at the time of issuance, it still had outstanding issues, but was given an interim licence anyway,” Minister Patterson had stated.
He said that when he assumed office he sought to find out on what basis the company was granted the conditional licence.

The Minister was informed then that the permission to export oil was to facilitate a proposal by China Zhonghao to attempt to establish refueling and other bunkering services in port or at sea, to Chinese or other fishing fleets, and any other vessels traversing the Caribbean Sea.
Patterson said that since the PPP/C never granted the fishing licence, “we wrote seeking justification for a licence since fishing was their basis first time around.”

Former PM Hinds, who had the portfolio of energy, had insisted then there was no corruption. “Guyana already has small incidental exports/re-exports of fuel. All fuel (and other) sales to international carriers –ships and planes – are exports/re-exports,” he said.
Hinds said that during the years of the PPP/C administration, the economy increased, and there was a need to improve it a further tenfold if the country wanted to attain the prosperity it wants.
“We have to look for new activities, thinking out of the box, opening our minds to a thousand possible new ventures with the hope that some tens of them would take root and be fruitful.”
It is against this background, the former PM had said, that the then-Government “agreed” to issue a fuel export licence.

The Falls gas station is in service, but it is unclear whether the company has started bulk fuel importation operations. Authorities had halted an unauthorized wharf construction.
According to the GEA notice, in all there are 35 Import Wholesale Licence Holders with one

Export Licence Holder. Some 14 licences were also issued for Wholesale Licence Holders, with 464 permits granted for retailing.

With regards to consumers and others being licenced to store fuel on their premises, some 230 such licences were granted. The number of Bulk Transportation Carrier Licence Holders is 73.

Along with this, 557 licences for Canters, trucks and tankers to fetch fuel have been granted also by GEA.

Guyana has been paying attention to the fuel trade in recent years, with significant reported smuggling activities taking place, even among those granted licences. The trade involves billions of dollars annually for Guyana with the Guyana Revenue Authority complaining about significant taxes lost as a result of smuggling.

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