‘Secrecy of contracts continues to endanger Guyana’s pockets’ – Former Presidential Advisor

Jan 19, 2023 News

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Kaieteur News – Harmful provisions in Guyana’s Production Sharing Agreement (PSA) with ExxonMobil and partners, is one of the key reasons why stakeholders have increased their call for the disclosure of the resource contracts Guyana governments have been signing with foreign companies.

The Exxon oil agreement, which was revealed through public pressure, highlighted several favourable exemptions and allowances that caused Guyana to sacrifice billions of US dollars to allow the Exxon consortium to work here. Former Presidential advisor Ramon Gaskin believes that Guyana is heading for more danger if the resources are continued to be handled in a casual manner.

He indicated that with the exposure provided to Guyana through its world class oil finds, and the government’s drive to sell the country as a major business investment destination, “we are headed for more danger if we continue to treat our resources in this manner.”

Gaskin, a transparency advocate, economist indicated that the current politicians seem not to be learning from experiences as they fail to insulate the country from the clutches of potentially harmful corporations. “Do you know that Omai worked here for 10 years and never declared a profit,” the advisor questioned. He explained that when the foreign gold company worked in Guyana, having commenced in the early 90s and leaving in mid 2000s, it continuously declared losses allowing them to not pay their rightful taxes to the country. He said having perused the gold company’s finances, he found that the parent company converted the investment into a loan and charged high interest rates. “Normally you are supposed to make a profit, declare your dividend and pay it over. That didn’t happen, they took the money with this investment and converted it into a loan at a high interest rate… and that interest killed the company profits.” He said the company used the loan to declare losses every year despite mining 300,000 ounces of gold per annum, except for the year it experienced a chemical spill, and for which, Guyana was never compensated.

Gaskin opined that Guyana was lucky to have been exposed to the 2016 Exxon contract to actually see the startling compromises. For example, he asked, “How is it that the biggest company in the world does not pay taxes but an ordinary Guyanese worker, a teacher, a nurse, a police inspector got to pay taxes making $150,000, $200,000 a month?”

Guyana is losing millions of US dollars because it agreed to pay certain taxes on behalf of the oil companies.  The PSA revealed among other things that Exxon can recover interest on loans and there is no cap to the amount that could be reclaimed as cost oil. The International Monetary Fund (IMF) warned Guyana to close the loophole as it could lead to abuse by the oil companies who would finance their projects against loans instead of money from their pockets. These uncapped loans and interest repayment lead to lower profits and less money for Guyana.

These are some of the unfortunate situations Guyana faces with its resources, Gaskin said. These are matters that the Tax Commissioner and other relevant state offices should be looking into, but since no information exists, Gaskin said it’s hard to say what is happening. He said the Parliamentary Opposition is not doing enough to confront the government on these types of issues. He opined that the tactics they are employing “just ain’t mekking it.” In other cases, the advisor said professionals who understand what is going on are not speaking out because they are closely aligned with the governing party.

The Government was pressed since last year to make contracts public; those that were signed with foreign companies. Guyana’s third Extractive Industries Transparency (EITI) report in 2022 asked government to make the mining contracts public, but they have not.  Since becoming a member of the global body, the report said that the Government agreed to adhere to several requirements including EITI requirement 2.4 (a) of the 2019 Standard which states that Guyana should publicly disclose all mineral agreements entered into force prior to the reporting period. While the administration is aware of this requirement, it remains unfulfilled.

Vice President Jagdeo was asked repeatedly about the contracts at press conferences last year. At one point, he said the resource contracts did not lie with the President’s office and directed reporters to engage relevant agencies such as the Natural Resource Ministry, the Guyana Revenue Authority and the Commissioner of Information; none of whom have provided information so far.

During Kaieteur News’ publisher, ‘The Glenn Lall Show’, last September, the VP undertook to finding out where the contracts were and why GRA was so “cagey” about releasing the documents. He said, “I don’t think these agreements should be secret. Right, because the concessions are standard…” “I will undertake that anything that is non-propriety that you get it released. I will personally now see that this happen,” Jagdeo said. Yesterday, President Irfaan Ali said that he would explore if it is possible. He said that his government is transparent but it “…does not mean that there is no confidentiality in anything. What I am saying is the contracts in the mining sector and those contracts that exist that you want to be released and those are things that the sector has to examine.”

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• Extractive Industries Transparency (EITI), ExxonMobil, Production Sharing Agreement, Ramon Gaskin, Tax Commissioner

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