Kaieteur News – Second Vice President, Bharrat Jagdeo was Opposition Leader between 2015 and 2020. During that period, he was highly critical of the Production Sharing Agreement (PSA) which was signed by the APNU+AFC government with the oil companies. Now that he is in government, he is singing a different tune.
He had criticised the PSA on many fronts. He had pointed to the pre-contract costs which had to be repaid. He accused the Coalition government of downgrading the PPP/C’s agreement with the oil companies, including through the insertion of the Stability Clause which it was said tied Guyana down to a number of lopsided provisions. Jagdeo himself pointed to Exxon paying no taxes, being unaffected by any future law and only having the obligation to bring gas onshore for domestic demand.
Jagdeo was definitive in January 2018 that Guyana lost significantly from the deal. He said Guyana ended up with ‘peanuts’ while Exxon walked away with a favourable agreement.
During the debate on the no-confidence motion, Jagdeo said the Coalition had the opportunity to renegotiate more benefits in the 2016 contract. Instead, of doing this, he said the Coalition approached the negotiations unprepared and incompetently struck up a deal that would harm the country for decades. He further accused the Coalition of selling out the national patrimony and seeking refuge in national security considerations.
When the then head of Transparency International Guyana Inc. called for renegotiation of the 2016 contract, Jagdeo said that this is something he feels strongly about. He also said that the PPP/C would make this a prominent feature of its Manifesto for the 2020 elections.
It did. In the excerpts of its Manifesto, the PPP/C said that upon taking office, it would immediately engage the oil companies in better contract administration/renegotiation.
But no sooner had the PPP/C settled into office, it began to speak about future contracts. It claims it has to respect the sanctity of existing contracts but would amend future contracts. It has placed renegotiation on the backburner.
During his appearance on last Tuesday’s The Glenn Lall Show, the host reminded Jagdeo about his criticisms of the PSA signed by the APNU+AFC. Lall then asked him what rate of royalty would have been fair to the Guyanese people.
Jagdeo instead of providing a direct answer to a straight question, he began to bob and weave. He said he did not want to be premature. He said that the government has to issue new contracts and was working on a model PSA.
Glenn Lall interrupted him courteously and clarified he was not asking about the royalty in the new PSA but rather what would he, Jagdeo, have negotiated as a royalty rate in the 2016 contract.
Jagdeo began to bob and weave again. He proceeded to go into a different direction talking about three variables which the government is utilising to govern a new PSA: the company must get a fair return, create enough incentives for production and a greater share of government for benefits.
He said if he says 5 percent royalty, he is preempting the discussion. But what discussion is Jagdeo speaking about?
Guyana does not have to enter into any discussions about the royalty rates with the oil companies. It is Guyana’s prerogative to set the new royalty rates in the new model PSA. A model agreement is determined solely by the government.
But what makes Jagdeo even more evasive was that he was not being asked about the new PSA but rather if he was in the Coalition’s shoes, what sort of deal he would have signed.
Providing a direct answer to this question neither pre-empts nor prejudices whatever happens in the new PSA. Guyana has to state its conditions in the new PSA and negotiate around those demands. There is no preempting.
But one understands why Jagdeo is bobbing and weaving on this issue. In June 2019, when he was still Opposition Leader, he recommended that no further concessions should be granted to the oil companies until a model PSA was completed. The reason for taking this stance was because, as he said, the 2016 PSA acts as a precedent for future contracts.
It is hereby respectfully suggested that Jagdeo could not provide a direct answer to Lall because it is not likely that the model PSA is going to deviate much from the 2 percent royalties which 3 years ago, he said set a precedent for future oil contracts.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)
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