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Wait for the fine print

Nov 10, 2022 Editorial

Kaieteur News – The majority of Guyanese should have learned many costly lessons by now from Vice President Bharat Jagdeo.  The first cautionary one is that when Mr. Jagdeo brings a gift to Guyana, it usually has some sting in the tail for Guyanese.  The truth is that Jagdeo, be it as Finance Minister or President, or now as Vice President might appear to be giving Guyanese a yard of breathing space, when the reality is that all he did was give Guyanese citizens a mile of rope with which he intends to hang them.

This is what an Opposition MP has warned delighted Guyanese about (“Don’t rejoice over new PSA terms yet, wait to see the fine print -Patterson cautions” -KN November 7).  It is instructive that, with most things that Bharat Jagdeo touches, there is this underlying fear, this ongoing uncertainty and deep skepticism.  The concern is that he has some hidden agenda, that he has withheld crucial details, and that what looks good on paper, are not as good as they appear for the Guyanese people.  In fact, the opposite may be true, and has proven to be true often, in that what came across as good in the first unveiling concealed plenty of what is destructive.  The fine print is where the real truths hide.

As announced by Vice President Jagdeo himself, the new Production Sharing Agreement (PSA) planned for the 14 oil blocks to be auctioned resonate.  There is more royalty, taxes, different cost ceiling, and ring-fencing, among other lesser provisions.  Royalties are up to 10% from the current measly 2%; taxes would be applied at 10%, as upped from zero percent; the cost ceiling is lowered from 75% to 65% for expenses to be charged; and where there was nothing for ring-fencing, that takes effect.

As expected, the reactions of Guyanese have been mixed, and rightly so, as we believe.  More for royalties is a good beginning, and that neon-lit figure just couldn’t stay at 2%, for then no Guyanese would pay attention to anything that followed, no matter how attractive.  On the other hand, as to why taxes should be at 10% is a mystery, and simply lacks appeal.  Guyanese companies are paying three times that amount in taxes, and while there is appreciation for attracting and incentivizing foreign investors, 10% is too low, and by half.  A fair and reasonable starting point for taxes had to be, could only be, 20%, if not slightly higher.

Further, the Vice President was pleased to speak to ring-fencing provisions now onboard for future projects, but Guyanese want to know about full liability insurance coverage in the event of an oil spill.  Also, as much as Guyanese are supportive about this for future projects, there are insistent calls for both ring-fencing of expenses and that same kind of liability coverage for current ExxonMobil operations offshore Guyana.  It is highly suspicious that Mr. Jagdeo comes out with his song and dance new PSA to encourage Guyanese that he is doing his best, and what is right by them.  The fact of the matter is that he is not.  The fine print will confirm or not.

Real change and real progress with oil would be to squeeze out concessions from ExxonMobil on the unbelievably rich Stabroek Block.  The American company is producing from the Stabroek Block with astonishing riches for itself, and nothing but leftover scraps for us.  This is where Guyana could come into its own and where Jagdeo should make powerful strides to bring about change.  It can only come from renegotiation of the 2016 contract.  Considering how matters stand presently, ExxonMobil snatches our crown jewels from the Stabroek Block, while Guyanese are left with the equivalent of fake jewellery.  It is flashy, but possesses little value.

The new PSA has its merits, but what is behind it, and unknown, is where the real story lies.  With Jagdeo, there are these doubts since it is his history.  Guyanese live with the terrible results of his stories that had a sweet ring at the beginning.  The fine print will reveal how much Guyana is going to give up for what Jagdeo says that it is going to get.

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