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Why not close the loophole?

Jul 04, 2021 Editorial

Kaieteur News – The interest alone is killing us, and that’s only one year’s interest on Exxon’s oil leases. Thanks to probing work by Christopher Ram, all Guyanese are made aware of the interest burden borne, compliments of greedy, predatory Exxon. Citizens and the world know now of the big dollars involved in the interest yoke placed upon the neck of this society by ExxonMobil (“Guyana paid $7.8B last year in interest on ExxonMobil leases – will continue to pay more if the loophole is not closed – Ram” KN June 28).
The question is not so much why the loophole is not closed, but why it is taking so long to close? When will our leaders begin to manifest any interest in and devote some energy towards closing the interest loophole on those leases, which a laden oil supertanker could sail though? They are always telling us about the so-called positives, of how good we will do, but somehow these same leaders neglect to summon the same strength to share anything of the positives steps that they could have taken to reverse (or minimise) some of those negatives, like annual interest to be paid on Exxon’s leases.
Current PPP leaders have failed to make a difference on what is such a big-ticket item. It is so big, high single-digit billions in annual interest charges, that no one with any accounting sense, or any of the keen wisdom of vigilant leaders fighting for their fellow citizens, could miss it, or pretend that it does not exist. In the same manner, leaders in the previous APNU+AFC coalition have no excuse, and cannot be pardoned, for their failure to do right by country and citizens. In fact, the Coalition comes out of this interest on Exxon’s leases fiasco looking terrible and smelling worse, since it was cautioned of the implications.
The interest loophole was/is so disturbing that even the IMF, never a friend to poor Third World societies, had problems with that provision. As the KN article referenced above noted, “The IMF even advised the former APNU+AFC Government to prohibit the oil companies from recovering the interests on other financing costs.” No government could have had a more authoritative source on interest than the IMF. Yet the Coalition government, for some mysterious reason, ignored the sage advice and did absolutely nothing. As an indication of the IMF’s disagreement with such an interest provision, it went still further, for “The IMF had even urged Guyana to ensure its production sharing framework explicitly states that this is not allowed.
Well, allowed it is, and now we pay a steep price in billions. When we think of what the IMF offered to Guyana, we cannot help thinking of that song from legendary soul singer, Percy Sledge, with its sad lyrical refrain and title of “Take time to know her.” According to the lyrics, Percy didn’t listen to Mama about his future bride, and so did the Coalition government of Guyana. “Since nothing was ever done”, Guyanese must now live with their Exxon bride, and this billion-dollar interest habit.
Another known oil presence taking an identical position is Tom Mitro, a former University of Houston Instructor. He is one that the current PPP government and the man who thinks he is Guyana’s John D. Rockefeller, the Vice President, has no patience in listing to, or use for (since what he has to offer goes against the government’s and VP’s narratives). Mr. Mitro had this to say, “In some PSAs, they do allow interest as part of cost recovery, but that is no longer a common practice. He went on to say that if and when they are allowed, then “strict rules” are put in place “to prevent potential abuse.”
It seems that the only rules finding favour with the PPP government and its Vice President, with regard to this oil wealth, are those that denounce Guyanese who object to what is going on in our relationship with Exxon. Or that marginalise those who stir themselves to protest. Or, worse, that muzzle those who dare to interfere with how government leaders conduct the nation’s oil business with Exxon. Why not close the loophole? Why not search for an opportunity to hold Exxon honest?

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