Latest update November 21st, 2024 1:00 AM
Taxes waived for Exxon in 2020 more than what Guyana received from extractive industry for same year – EITI Report
– country earned $93B, lost $107B
Kaieteur News – As the Government and Opposition continue to hold back on renegotiation of the lopsided Stabroek Block deal, Guyana has been losing billions annually that can be used to fund the country’s development and improve the lives of its poor citizens.
This is especially evident when one analyses the taxes alone that were waived for ExxonMobil and its partners in 2020- which denotes the first full year of oil production in the country. Guyana’s new Extractive Industries Transparency Initiative (EITI) Report, for the year 2020 has revealed that the country earned a total of $93.77 billion from its extractive industries, comprising the oil, gold, diamond, bauxite, timber and fisheries sectors among others.
During the same period, the country however waived over $107 billion in taxes for the oil and gas sector. This means, Guyana lost more revenue in taxes than it earned for that year in its entire extractive sector. According to the EITI 2020 Report, the oil and gas sector accounted for $65.83 B, mining $26.37 B, forestry $1.24 B and the fisheries industry $0.34B.
It was noted that, “Total revenues from the extractive sector increased by GYD 54.59 billion,” when compared to the previous year- 2019. The increase in revenue earned by the extractive industry was as a result of the new petroleum production activities income which grew by $51.62 billion.
Based on the provisions of the 2016 Production Sharing Agreement (PSA) Guyana has agreed to make tax payments on behalf of the Stabroek Block partners. The contract stipulates at Article 15.4 that the sum equivalent to the taxes owed by the companies will be paid by the Minister responsible for Petroleum to the Commissioner General of the Guyana Revenue Authority (GRA).
Table showing tax exemptions granted to oil companies since 2015
As a result of the lopsided terms embodied in the contract, Guyanese have been protesting for the deal to be renegotiated to ensure the country benefits more from its resources. In January last year, Kaieteur News Publisher, Mr. Glenn Lall filed a case in Guyana’s High Court challenging some of the most repressive tax provisions of the Stabroek Block PSA with ExxonMobil and its partners. It wasn’t until February of this year that the Court handed down its ruling, upholding the waiver of the taxes to the oil companies.
In his application, Mr. Lall had contended among other things, that many of the provisions listed under Article 15.1 of the Petroleum Agreement, dated June 27, 2016 between the GOG and the oil companies, grant exemptions to persons other than licensees, which violate the Petroleum Exploration and Production Act (PEPA), and the Financial Administration (and Audit) Act.
As such, the newspaper publisher had requested declarations from the Court that the provisions are unlawful, null and void, and of no legal effect.
In his ruling however, Justice Nareshwar Harnanan said the minister is vested with the power under Section 51 of the PEPA and the Petroleum (Exploration and Production) (Tax laws) to grant EEPGL, CNOOC Nexen Petroleum Guyana Limited, and Hess Guyana Exploration Limited, all companies that are parties to the case, concessions of extensive tax exemptions.
For its part, ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) had contended that Lall stepped outside his boundary when he moved to the High Court to challenge the Government of Guyana’s decision to grant extensive tax waivers to the oil operator and its affiliates.
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