Jan 23, 2022 News
KN Publisher’s challenge to tax giveaways in Exxon deal…
Kaieteur News – When he served as Opposition Leader back in 2019, the now Vice President (VP), Dr
. Bharrat Jagdeo had repeatedly trashed the APNU+AFC regime for the poorly renegotiated Stabroek Block Production Sharing Agreement (PSA). In fact, the VP is quoted in the media as saying that the PSA which was signed with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), Hess Corporation and CNOOC Petroleum Limited, is a “contract that would harm us for decades into the future.” He even accused the APNU+AFC of having “sold our patrimony” to Exxon.
But the Vice President is not the only one in the PPP/C’s camp to harshly criticise the deal. In fact, Attorney General and Minister of Legal Affairs, Anil Nandlall, S.C, has said in Parliament more than once, that the contract is “the worst on the planet.”
In light of the foregoing positions which are shared by scores of local and regional actors, Chartered Accountant and Attorney-at-Law, Chris Ram says the historic legal challenge filed by Kaieteur News Publisher, Glenn Lall via his lawyer, Mr. Mohamed Ali, provides the Government of Guyana with a key opportunity to rebalance the agreement in favour of the Guyanese people.
In his most recent writings, Ram articulated that Lall through his lawyer is asking the Court to declare a number of the provisions of Article 15 (the Taxation Article) in the PSA to be unlawful, null, void and of no legal effect. Some of those provisions address the tax concessions granted to affiliated companies of Esso, Hess and CNOOC; the tax concessions to sub-contractors of Esso, Hess and CNOOC; and the provisions that exempt from taxes, the income earned by expatriate employees of Contractor, Affiliated Companies or Non-Resident Sub-Contractors who are in Guyana for 183 days or less in any tax year. Lall is also claiming that such exemption violates the Constitution of Guyana and the Prevention of Discrimination Act.
His case also challenges the provision of the agreement requiring the Minister responsible for Petroleum to pay the taxes of the oil companies out of the State’s share of profit oil.
Mr. Lall is also asking the Court to declare as unlawful, Parliamentary Order 10 of 2016 which sought to ratify the tax concessions granted under the Petroleum Agreement. Through his lawyer Mr. Mohamed Ali, Lall is arguing alternatively, that even if the Order is valid, it only applies to holders of licences under a Production Sharing Agreement.
Ram was keen to note that the respondent in the matter is the Attorney General while adding that it is likely that the three oil companies will apply to be joined in the action.
Furthermore, Ram said the current Government of Guyana which inherited the agreement from its predecessor has publicly defended the Agreement on the grounds of sanctity of contract. That principle he said is now being challenged by a more fundamental one: legality, and in one issue, constitutionality.
Should the Court rule that the tax Article is indeed unlawful, Ram said this would have a huge impact on the economics of the Agreement and result in significantly higher revenues to the country.
“We can expect the oil companies to fight to protect what then Leader of the Opposition Bharrat Jagdeo described…as a ‘contract that would harm us for decades into the future,’ accusing the APNU+AFC as having ‘sold our patrimony’. Logically, the Government should see this case as offering some re-balancing of the Agreement in favour of the people. Its response this time would be particularly interesting,” the Chartered Accountant stated.
Finally, Ram said the granting of the Application would affect the holders of all similar Agreements. “They too will be watching carefully,” the lawyer concluded.
The case filed by Lall via his Attorney-at-Law Mohamed R. Ali, is set to be heard on March 10, 2022 at 10:30hrs before the Honourable Justice Nareshwar Harnanan.
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