VP Jagdeo maintains royalty not recoverable

Jun 09, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Vice President, Bharrat Jagdeo has clarified that royalties received from the ExxonMobil-led consortium in the Stabroek Block is not recoverable.

The official advanced this position during a press conference at Freedom House on Thursday. Jagdeo made the foregoing point in response to an article that was published by this newspaper on Sunday last, stating that he was unsure if royalty was being recovered by the oil companies.

Vice President, Bharrat Jagdeo

Reminding of the comments that underpinned the story from a previous press conference, Jagdeo said this newspaper’s journalists had informed him that royalty was listed as an expense in the 2022 financials for Exxon’s affiliate and Stabroek Block operator, Esso Exploration and Production Guyana Limited (EEPGL). In light of this, he was asked to clarify if royalties are being recovered.

Jagdeo said he was keen to note that if it is listed as a “recoverable expense” then that is incorrect. Be that as it may, he argued that international accounting rules would dictate how expenses are to be outlined in such documents but it does not mean it is recoverable. The Vice President also reminded that Kaieteur News was told that this matter of whether royalty was recoverable was already handled by the Guyana Revenue Authority (GRA) since last year. Returning to the GRA statement yesterday, he quoted a section of it which said, “Royalties paid to the Guyana Government is an Expense incurred in the production of income for the contractor(s), but is not allowable in the calculation of Cost Oil.”

Had this statement been utilised by the newspaper, and further research done, Jagdeo said it would have been realised that royalty can be listed as an expense but not be allowed for recovery. The Vice President then urged for there to be a cautious approach on reporting financial issues since distorted statements in the public domain can do more harm than good.

He said, “Let me tell you something about these matters, we cannot approach the sector in an ignorant, uninformed way or we become the laughing stock of the world. When you sit in these positions you have to be careful. You would expect that newspapers would enlighten the people of the country but it makes the water even murkier by taking things that are clear and distorting them to suit an agenda.”

Jagdeo added, “If we do this then we cannot negotiate with the external groups that come here. We would be the laughing stock of the world. I am a macroeconomist and even when I speak about microeconomics or accounting, I am very cautious because there is a whole set of accounting clarifications and a whole range of stuff I have to seek answers to before I speak definitively.” On that note, the VP maintained that royalty is not recoverable and the previously issued statement by GRA on the matter stands.