The A Partnership for National Unity (APNU) and the Alliance For Change (AFC) have no credibility to talk about the management of the country’s oil revenue, Minister of Public Works Juan Edghill expressed on Tuesday.
He reminded that “the first oil money the APNU+AFC collect, they try to (conceal it).”
The minister was referring to the controversy surrounding the US$18 million signing bonus the then David Granger-led administration collected from ExxonMobil.
The APNU+AFC administration had secretly collected and banked a US$18 million bonus. Several government ministers repeatedly denied and sidestepped questions about the money. It was months later, under scrutiny in the National Assembly, that the government finally admitted to receiving the money.
In addition to not revealing that it received the money, the coalition administration was bashed for not depositing same into the Consolidated Fund as required by the Constitution.
President David Granger had admitted that he had instructed that the signing bonus be placed in a Bank of Guyana account instead of the Consolidated Fund.
Granger had no apologies for the secrecy and entire handling of the money, insisting that “evidence of non-disclosure does not mean it’s evidence of an intention of deception…there was no need to make it public.”
Against this backdrop, Edghill told citizens, “so don’t let them talk about oil money.”
“The only thing they upset about is they didn’t get a chance to continue to (conceal) the oil money,” he added.
On the contrary, when the People’s Progressive Party Civic (PPP/C) came in government in 2020, it put in place legislative and regulatory frameworks for the proper management of the country’s oil resources.
“We put in place legislation in the Parliament that if the Minister of Finance don’t report within 90 days any money that we collect from oil companies, he can go to jail for ten years,” Edghill explained.
The legislation is the Natural Resource Fund (NRF) Act.
The APNU+AFC administration is also criticised for its lopsided oil contract, known as the Production Sharing Agreement (PSA).
The existing PSA between the Guyana Government and ExxonMobil signed in 2016, which guides the extraction of oil in the Stabroek Block, pegs Guyana’s share of oil revenue as 14.5 per cent, including the two per cent royalty.
According to the PSA, 75% of all revenues must return to the oil companies to offset their investment expenses. In the petroleum industry, this is referred to as ‘cost oil.’ The remaining 25% of revenue, referred to as ‘profit oil’, is then split 50/50, with Guyana receiving 12.5 per cent and the Exxon-led consortium receiving the other half. The oil companies, out of their share of ‘profit oil,’ must also give Guyana a two per cent royalty, leaving the companies with 10.5 per cent to split amongst themselves.
Considering that this PSA has long been deemed a lopsided deal, the PPP/C administration has since introduced a new model PSA that will govern the affairs of all future production activities in Guyana.
In the new PSA, 65 per cent of all revenues generated are set aside for cost oil, a far cry from the 75 per cent that ExxonMobil and its partners are afforded in the Stabroek block. This means that there will be a greater pool of revenue for Guyana to access as a result of the new fiscal terms imposed by the government.
Additionally, the new model introduces ten per cent rates for corporate tax and royalties. This moves the rates up from zero and two per cent, respectively, ensuring that Guyana gets an even greater return on future oil activities.
When companies sign on to this new PSA, they are required to pay US$20 million for deepwater concessions, which are almost nine times smaller than the Stabroek block. This block alone measures approximately 26,800 square kilometers, and readers might recall that upon signing the 2016 PSA, Guyana received a meagre sum of US$18 million. Companies must also pay a signing bonus of US$10 million for shallow water concessions, a first in Guyana’s oil exploration history.
Furthermore, the PPP/C administration also introduced the Local Content Act, to ensure Guyanese benefit from the sector. The projected value of local content in 2025 is expected to surpass US$847 million, almost US$104 million more when compared to the 2024 figure.
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