RUSAL costs Guyana US$100 million in duty free 'FUEL ALONE'

RUSAL costs Guyana US$100 million in duty free ‘FUEL ALONE’

Nov 17, 2019 News

…investigations underway into re-sale of a third of its imports

Russian owned Bauxite Company of Guyana Inc. (BCGI/RUSAL), has reneged on its obligations under the ‘Business Plan’ it submitted to the Guyana Government, in a venture that has cost Guyanese more than US$100M so far, in FUEL ALONE.
This could have built another Demerara Harbour Bridge, renovated the Cheddi Jagan International Airport (CJIA) and increase public servants wages.
It has never paid any dividends to its 10 per cent partner, the Guyana Government.
Foreign Investors in a country like Guyana are often handed sweetening incentives–tax related incentives. Taxes are waived on most anything related to the new business but this comes with a caveat.
A ‘PLAN’
The company is expected to provide the government with a binding ‘Plan’ that details precisely what the country is getting in exchange.
Companies are provided with sometimes billions of dollars in waivers, a practice economists the world over call subsidizing by government, through foregone revenue, in order to ‘set up shop.’
This simply means that by waiving the taxes which would have been otherwise paid to country’s coffers, the country instead agrees to have that company use that money to build its business, most times for a limited period, before it is asked to contribute any corporate or other taxes.
INVESTIGATIONS
RUSAL is one such company that has benefited from the State’s largesse.
Investigations by Kaieteur News have found that the company ‘uses’ daily, an average of 18,350 gallons of diesel fuel.
This equates to 6.7 million gallons each year. The net effect is that the company in the past two and a half decades of its operations in Guyana, used an estimated 94 million gallons of diesel fuel.
US Refineries between 2005 and this year, sold diesel wholesale at an average of between US$1.50 and US$2.25, sometimes reaching as high as US$3.90 in mid 2008.
Using a conservative mean of US$2.00, this means that the company would have purchased US$188M in duty free fuel. The government waived the 50 per cent fuel tax or US$94M.
Mining or Fuel Sales?
Kaieteur News was reliably informed that the company is currently being investigated for reselling duty free fuel.
What this means is that the company was allowed to import or purchase fuel, minus any taxes and retail millions of gallons of fuel undercutting legitimate Guyanese fuel dealers.
RUSAL Incentives
According to the pact inked between the parties in the 2005 Fiscal Incentives Agreement, Rusal shall also be exempt from the payment of withholding tax on interest, dividends and lease payments to its affiliates.
The company has also been exempt from payment of all and any duties and taxes on equipment, machinery, motor vehicles and supplies.

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