Guyana is a Laughing Stock over Oil Contract

Feb 14, 2020 Letters

DEAR EDITOR,

In recent years, I traveled extensively around the globe conducting research on social science issues. Wherever I traveled, including in India (where my western accent gives away that I am not from that country), people were curious about my background. When I mentioned I am from Guyana, oil contracts quickly came up. Guyana makes the news everywhere (in Europe, North America, Latin America, Africa, Asia) on oil.
Business people wanted to know how Guyana gave such favourable contract terms and conditions to the oil magnates. Business people crave for such deals. They laugh at us for practically giving away our oil for virtually nothing. Worse, they are amazed that no one was or is held accountable for such terrible contracts. Even some staff of the oil companies ridicule Guyanese as being ‘stupid’ for giving away their oil.
In the diaspora, in New York, Toronto, and London, Guyanese and Caribbean people are shocked to learn about the terms of the contract. People have nothing good to say about the oil deals and they have every right to believe that there was corruption.
And in Trinidad, they really poke fun at us. While we think that we will outpace Trinidad and become wealthy, little benefits will redound to the average person. The oil companies will get more than 90% of all revenues generated from energy sales.
Guyana gets 2%, 1%, and 0% royalty for oil. Contrary to what someone penned (KN Feb 12), Guyana does not get 52% from the oil revenues. After 75% (plus other related costs like current labour) are deducted from total revenues of oil sold, for cost recovery, Guyana will get 2% royalty and share the remaining 25% in a fifty-fifty proportion or 12.5% each. Thus, Guyana will get 14.5% and then from that amount will pay the taxes of the oil company. Guyana’s share of revenues may well fall below 10%.
The average royalty given to other countries in oil operations is 12.5% and that percentage of revenues on the front end of sales before costs. Then profits are shared in a ratio in which the country gets the larger portion. The companies pay their own taxes. Guyana is far off from these basic worldwide standards. Not surprisingly, the country is a laughing stock. The oil company “ketch a pakoo and buss its back”, as we say in Guyana.
Every effort should be made to increase royalty and profits for the benefits of our people. Let us show the world that we are much smarter than being the laughing stock that oil companies have made us.
Yours truly,
Vishnu Bisram

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