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Fiscal clauses in model oil contract to be reviewed by Finance Ministry, GRA – Dr. Bynoe
Before it can be considered a finalised document, the fiscal clauses contained in Guyana’s model Production Sharing Agreement (PSA) will have to be reviewed by two key agencies—the Guyana Revenue Authority (GRA) and the Ministry of Finance.
Energy Department Head, Dr. Mark Bynoe
This was recently noted by Energy Department Head, Dr. Mark Bynoe.
At his most recent press conference, Dr. Bynoe said the provisions within the PSA are very strong and will likely be the best model contract ever. But to ensure that it is not too stringent that it hinders investment, the official said that it would be shared with various agencies.
Dr. Bynoe said, “There are certain clauses which have to be reviewed by the Ministry of Finance and GRA. Those are not clauses that we in the Department can pronounce on. There will be need for others to have input and then refine the model PSA before another licensing round which is not possible until the first quarter of 2020 because of all the things we need to have in place.”
This move by the Energy Department would be in keeping with one of the key recommendations of the International Monetary Fund (IMF), which had stated since 2016 that the Ministry of Finance and the Guyana Revenue Authority should have primary responsibility for the wording and interpretation of fiscal and tax provisions of the model Production Sharing Agreement.
The Fund, which is assisting Guyana in preparing for the oil sector said it is necessary to have these two institutions involved in the aforementioned process so as to mitigate loopholes and improve and control the audit of recoverable costs.
In addition, the Fund said that leadership on fiscal provisions and petroleum costs audit should be given to the Guyana Revenue Authority, which it stressed, has experience in tax audits.
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