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Maximise and receive “real” compensation and not charity
Dear Editor,
Allow me to make a comment on two reports in Kaieteur News: 1.US Ambassador: changing agreed deals sends ‘bad signal’ to investors (March 2 ,2026) and 2. Guyana benefitting from oil boom through Exxon’s community investments and cricket sponsorship – U.S. Ambassador (March 1,2026).
The reports must be read together because the U.S. Ambassador’s message combines condescension and more important, a stern warning to present and future governments of Guyana. The message: Guyanese people, be happy with the 2016 petroleum contract; you’re doing just fine with 2% royalty; zero ring-fencing, zero corporate tax (Guyana pays the tax in a functionally circular way); and be very patient for the 12.5% return or 52% Government Take. Meanwhile, be thankful for the cricket sponsorships (Guyana Amazon Warriors and Caribbean Premier League) and the $100 million agreement, yes, just an agreement to support Science, Technology, Engineering and Mathematics (STEM). But, folks, get it in your heads there shall be no renegotiation of the contract, which means also no sharing of windfall profits. Period.
I won’t say much more but share the quotation below from an article by Jenik Radon (Adjunct Professor at the School of Public and International Affairs, Columbia University, teaches natural resource development, economic development and governance in small states and corporate responsibility).
“Often oil companies, during the course of negotiations, will be asked to or will offer to underwrite social projects to demonstrate that they are good corporate citizens. These projects may include building schools, playgrounds, hospitals or sponsoring scholarships for students. Supporting such projects is honorable and public-spirited. The building of a school, moreover, certainly provides favorable press, a good image, and cements community relations for a company. It also recognizes the government official negotiating an oil contract as a doer, a leader who can deliver public benefits. Too often, however, these visible and immediate charitable contributions become at best a distraction that deflects a government from vigorously negotiating the hard issues, in particular compensation, and at worst an expensive “trade” for the payment of lower compensation by the oil company.
The government’s goal should be to maximize receiving “real” compensation and not charity, and this can only be attained if social projects are not tied to contractual negotiations, whether in the oil contract or in simultaneously executed agreements.” Reference: Jenik Radon (September,2006), How to Negotiate an Oil Agreement Jenik Radon Resource Curse”, Initiative for Policy Dialogue Working Paper Series. To give a numerical sense of what Radon is saying, differentiating between real compensation and charity, consider that the price or crude has jumped from $60/bbl to $110/bbl. On the 900,000 bbl/day that Guyana is producing, Exxon earns $45,000,000/day more emphasis “per day” and “more” in windfall revenue than a couple of months ago before the Iran War. In a month, Exxon’s extra income is $1.4 billion. The real “tangible benefits” the Ambassador spoke about in the articles omitted Guyana’s sharing in the windfall from its resources.
Radon nailed it, almost two decades ago: “Too often, however, these visible and immediate charitable contributions become at best a distraction.” He would advise Guyana exactly what he wrote in that article: maximise and receive “real” compensation and not charity.
Sincerely,
Terence M. Yhip
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