High Court orders SOL Guyana to pay $2.1 B for fuel imported for ExxonM operations but not delivered

May 11, 2025 News

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Kaieteur News- The High Court ordered SOL Guyana – a leading supplier of energy solutions in the country – to pay GY$2,196,908,802 with interest to ExxonMobil Guyana Limited, formerly known as Esso Exploration, for 54,878,817 litres of fuel that was purportedly imported for their operations but was not delivered.

The judgment was handed down by Justice Nareshwar Harananan on Friday.

According to a court document seen by this newspaper, the case finds its genesis in a Production Sharing Agreement entered into between the Government of Guyana and Esso Guyana on 27th June 2016. The agreement allowed Esso Guyana to receive the benefit of a partial tax exemption on imported fuel at a rate of 10%. In 2020, the Defendant, after sending a letter specifically requesting the exemption owing to their status as importers of petroleum for Esso Guyana, was granted a concession to import fuel for the benefit of Esso Guyana at the exempted rate.

According to its claim, a consignment of fuel amounting to 202,829,427 litres was at the center of the dispute.  GRA has challenged the amount of taxes paid by the Defendant (SOL Guyana) on the volume of fuel imported based on their assessment that only 147,950,610 litres of fuel were delivered to Esso Guyana. The GRA alleged that the remaining 54,878,817 litres of fuel were neither delivered to Esso Guyana nor have they been properly accounted for, and thus, do not qualify for any tax exemption, which is only for the benefit of Esso Guyana.

The GRA therefore sought the sum of $2,196,908,802 for the fuel that was purportedly not delivered to Esso Guyana.

Sol Guyana denied the allegations that they have not supplied all the imported fuel to Esso Guyana. Notwithstanding, the fuel import group argued that the GRA has not proven with reference to any documentary evidence or otherwise that the aforesaid quantity of fuel was not supplied to Esso Guyana. The company denied liability on the basis that they have no obligation to pay the sums now sought by the Claimant.

The GRA had contended that SOL Guyana was not a beneficiary of tax-exempt fuel and had no lawful entitlement thereto. It was asserted that SOL acted solely as an importer on behalf of Esso Guyana and was therefore under a legal duty to deliver the full consignment of tax-exempt fuel to Esso Guyana, without retention or diversion.

The GRA averred that in 2020, SOL imported a quantity of fuel, of which only a portion was delivered to the designated beneficiary.  To support their contentions, the GRA relied on the Production Sharing Agreement, Section 12(2) of the Excise Tax Act and Regulation 2, Table A-6 of the Excise Tax (Amendment) Regulations 2006.

In its counterclaim, SOL Guyana asserted that under Article 15 of the Production Sharing Agreement, Esso Guyana was fully exempt from and/or subject to a reduced rate of customs duties and excise taxes related to its offshore petroleum operations. They accepted their obligation to deliver all tax-exempted imported fuel to Esso Guyana.

However, the Defendant sought to explain the process by which these tax exemptions were granted. They asserted that to implement these tax exemptions, the Claimant would issue exemption letters specifying the quantities and timeframes for tax-exempt imports.  SOL noted that Esso Guyana would issue Purchase Orders for the fuel, and the Defendant was required to pay full excise tax upfront (50%), later recovering the 40% upon providing valid exemption letters, with the recovered amounts being applied to future imports.

The Defendant averred that customs declarations were processed through a UNCTAD-developed programme known as ASYCUDA World (AW) Program, which the Claimant often operated in arrears by issuing exemption letters after the fuel had been imported.

The company claimed that there were delays by the Claimant in issuing the exemption letters in the year 2019, due to various flaws in the implementation of the System. However, despite these failures by the claimant, SOL continued to deliver tax-exempt fuel to Esso Guyana and pay the full excise tax sum due on the fuel on the undertaking by the Claimant that they would issue exemption letters with retroactive effect once the system became fully functional.

In determining a judgment, the Court noted that SOL had not submitted any evidence which would support an expressed promise made to them by the Claimant, and the court concluded that the practice of tax exemption for Esso Guyana was far from regular or routine, but somewhat fluid. In the Court’s view, the Defendant based its counterclaim on the erroneous belief of an entitlement to the tax exemption.  It was therefore ordered that the Defendant pays the Claimant the full and applicable excise tax payable on 54,878,817 litres of fuel calculated to be the sum $2,196,908,802, together with interest thereon calculated on the judgment sum at the rate of 6% per annum from the date of filing to the date of judgment, and thereafter at the rate of 4% per annum from the date of judgment, until fully paid.

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• Esso Exploration, GRA, High Court, Justice Nareshwar Harananan, SOL Guyana

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