Latest update March 25th, 2023 12:57 AM
Jan 18, 2023 News
Kaieteur News – Guyana, new to the oil and gas sector, has over time received advice from several international agencies and has been the subject of many reports focused on ensuring the country adopts best practices when it comes to the management of the sector.
However, the leadership of the country does not seem inclined to heed the advice unless Guyana is specifically mentioned in the reports.
The Commonwealth Secretariat, of which Guyana is a member country, recently issued a report that warns of the various ways oil producing nations can be robbed by petroleum companies when it comes to decommissioning or cleaning up the environment, following the life of an offshore project.
Despite this, President Irfaan Ali said he will not respond to any question on advice given by the agency.
At his first press conference for the year, hosted at State House on Tuesday, the Head of State was responding to a question from Kaieteur News when he gave the startling response.
He was told that several oil experts and international bodies have criticized the way his administration is managing the oil sector and the International Monetary Fund (IMF). a Global Financial Institution, just warned that Guyana should cap the interest rate on the oil companies to avoid them robbing the country.
Similarly, the President was told that the Commonwealth also issued advice to the country, but before the question was completed, he interrupted and requested that the direct quote be pulled from the reports.
A Journalist attached to this newspaper attempted to explain to the President that while she does not have a photographic memory, she can explain what was said by the body.
Ali however said, “Well, I can’t answer you. You quote directly for me…quote for me what the IMF said in relation to Guyana. I will answer you directly. Then also, the Commonwealth, there are many oil experts also who are writing about the performance of Guyana who have lauded the Government of Guyana for the way we are handling the oil and gas sector for our work in terms of utilizing the administrative mechanisms for work in the new (Production Sharing Agreement) PSA, for our work in going out to auction on the new (oil) blocks, so what is it you want? What is it we want exactly?”
The President declined to respond to the questions unless he is certain that the counsel was directed to Guyana.
“Let’s deal with statement of fact. Did they say that about Guyana or was it a general statement because I know what it is, so you tell me. You are asking me this question now my friend, you tell me, was this a general report or was this a report about Guyana?” the Head of State said.
He was told that while the Commonwealth report was general, the IMF report was specific to Guyana. However, President Ali was adamant that the quote must be shared for a response to be offered.
The IMF, one of Guyana’s key development partners and advisors on the oil sector, believes authorities should move to close fiscal loopholes in the Stabroek Block Production Sharing Agreement (PSA) that would lead to abuse.
One area it highlighted in a technical report prepared for the State is the need for immediate attention on provisions governing interest rates on loans taken by ExxonMobil and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited. (Please see photo attached for a section of the report.)
The IMF said it is an industry norm that the Government of the day disallows interests from being recovered on loans. Even if this is allowed, the administration sets a cap or limit to prevent the full interest amount from being recovered.
The IMF pointed out that Guyana not only allows the recovery of the interest but also sets no cap. Guyana has also waived its right to tax such interest amounts.
The foregoing loopholes it said provide enough incentive for the Contractors to finance their projects with loans instead of revenues from their accounts.
Meanwhile, the Commonwealth Secretariat which spoke specifically to developing member countries that have burgeoning oil and gas sectors to the need to be weary of the uncertainty of decommissioning costs, which can result in the price tag to restore the ocean floor, easily moving from US-millions to US-billions.
As a result, the Commonwealth urged Governments to ensure they implement policies and regulations that would require oil and gas companies to give regular estimates on decommissioning costs.
They are being paid while we are being played…your pain is their gain!
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