Guyana’s future has been mortgaged to the oil companies

Jul 17, 2021 Features / Columnists, Peeping Tom

Kaieteur News – Burnham took away a lot of properties. In addition, he did it under a law, which allowed for inadequate compensation.
The 1980 Burnham Constitution had provided for the compulsory acquisition of property but required that this has to be done under a law, which provides for the rate of compensation. Burnham had such a law and prior to becoming Executive President he would simply take away your property and pay you under a law, which paid 1939 values. But before you got your money, he would unleash the taxman on you. In some cases, he simply took over the property and left you to challenge for compensation. By the time the case was completed, the claimant would have already died or run out of funds to pay the lawyer’s fees.
Burnham’s 1980 Constitution provided that he did not have to pay compensation for buildings, which he had taken over and used, as schools. This is how he escaped paying for the take-over of school buildings not owned by the government. The 1980 Constitution also allowed him to take over property without compensation if it was not beneficially occupied or if it is beneficially occupied it is not being so occupied by the holder of the title owner or a member of his or her family.
In 2004, Jagdeo passed the Investment Act. It was something, which the neo-liberal international institutions had been pressing for. This Act provided for the payment of adequate and prompt compensation and for approaches to the Court by any aggrieved party to determine the amount of the compensation and interest.
Given this provision of our laws and the protection afforded by the Constitution, it would not be advisable for any government to seek to nationalise the assets of foreign oil companies. In fact, there are serious consequences for any form of nationalisation. The courts are likely to treat adequate compensation as amounting to market values.
The APNU+AFC had constructively ‘nationalised’ the Berbice River Bridge. It did so under the pretext of taking over the management but in so doing, it took possession of the bridge. The Investment Act is very clear that compensation is paying from the moment possession is acquired.
Exxon, Hess and CNOOC signed an agreement with the APNU+AFC, which protects them from any attempt at nationalisation. The Stability Clause of the agreement provides that if in the event of a change in law – whether through the passage of a new law or the amendment of an existing law – the oil companies are placed in a worst off position than they were prior to the changes, then the government had to take affirmative action to restore the lost or impaired economic benefits. In other words, the government is free to change whatever laws it wants, but Exxon and company cannot be put in a disadvantageous position; otherwise, the lost or reduced benefits have to be restored. This is what APNU+AFC signed for reasons, which only it knows best.
The Stability Clause of the Production Sharing Agreement effectively makes nationalisation impractical if not impossible. And so those who are calling for the nationalisation of the oil industry are wasting their time and efforts.
What is required is renegotiation. But we know where the APNU+AFC and the PPP/C stand on this issue. The APNU+AFC sold the country short, very short in its negotiations with Exxon. And the PPP/C has opted to not renegotiate but to seek improved terms in future oil agreements with other firms.
The PPP/C will not be afforded that opportunity. Exxon will simply buy-out the interest of other companies, which have a stake in so far unexploited oil blocks. The agreement, which Exxon signed, allows it to move its assets from one block to the next, effectively giving it a right to enjoy the same concessions in other oil blocks as it has in the Stabroek Block.
Guyana’s back is up against the wall. Nationalisation is out of the question and may not be advisable. The United States will not stand idly by and allow its assets to be seized by any government. Look what it has done to Venezuela after Chavez moved against Exxon.
And our leaders are bent on not renegotiating the existing contract.
The people find themselves between a rock and hard place. Their future has been mortgaged by the APNU+AFC to the oil companies, and the PPP/C has extended the life of that mortgage. God help Guyana!
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)

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