Nov 20, 2023 News
Misguided or misinforming???
“The government is not directly investing in the oil and gas sector. That is the misinformation I believe that is being spread and there is this perception among our people that the government is taking the money and investing in oil and gas but if I ask you as the media how much money did Guyana invest in oil and gas in the oil and gas exploration offshore, we haven’t invested anything. We haven’t invested anything, not a dollar in the exploration, the upstream activities offshore Guyana.” – Minister Vickram Bharrat
Kaieteur News – The Minister of Natural Resources, Vickram Bharrat on Tuesday told reporters that Guyana is not investing in the oil and gas activities in the Stabroek Block offshore.
He was at the time responding to a question from Kaieteur News on what the rate of return (interest) is on U.S oil giant, ExxonMobil’s multibillion-dollar investment is.
The country is being charged an interest rate on the company’s equity contribution to develop the resources discovered in the block. This is deducted monthly through Guyana’s oil.
Notably, Vice President, Bharrat Jagdeo, in June this year while responding to a question on the subject confirmed that the company was charging a rate of return but did not allow further scrutiny. “Regardless of whether you make the financing in the form of a loan or equity you have to get a rate return. There is a cost of capital and that is how it is,” Jagdeo asserted.
During the Minister of Natural Resources’s press conference last week, Kaieteur News specifically asked the Minister to confirm the rate of return on Exxon’s multibillion-dollar investments in the Stabroek Block, when initially he glossed over the issue.
After being reminded of the question, Bharrat explained, “The government is not directly investing in the oil and gas sector. That is the misinformation I believe that is being spread and there is this perception among our people, that the government is taking the money and investing in oil and gas but if I ask you as the media how much money did Guyana invest in oil and gas in the oil and gas exploration offshore, we haven’t invested anything. We haven’t invested anything, not a dollar in the exploration, the upstream activities offshore Guyana.”
The Minister’s response left reporters puzzled as Bharrat was never asked about Guyana’s investment, but rather, Exxon’s.
On Friday, Executive Member of the Alliance For Change (AFC) and former head of the Alliance For Change (AFC), Dr. Vincent Adams called out the administration for lacking transparency on the interest rates being charged by the company.
Dr. Adams argued that the loans are being racked up by Guyana like drunken sailors to develop the resources, however the country remains in the dark on the rate of return.
“We ought to know what the magnitude is in terms of what we are paying for because we are the ones who are paying it… we have got to understand and open our eyes and hold them accountable for they should be telling us what those interest rates are,” the former EPA boss reasoned.
He said an interest rate of 10 percent was mentioned in the public domain; however, this is yet to be confirmed by the government. To this end, the AFC described the interest rate situation as “kitchen table economics” since the Natural Resource Fund (NRF) rakes in a mere 1.36% in interest but the country could be borrowing loans at an average 10% interest rate.
The International Monetary Fund (IMF) had warned that Guyana could lose massive revenue by failing to cap the interest rates on the investments for its oil projects.
The body 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.
Businessman and Publisher of Kaieteur News, Mr. Glenn Lall during his radio programme aired on 99.1/99.5 FM had said that at a 10 percent interest rate on the US$50 billion investments in the Stabroek Block, Guyana could be paying US$5 billion annually in interest alone. On the other hand, he pointed out that Guyana has been barely earning just over US$1 billion in profit and royalty a year.
Pres. Ali putting water meters on the citizens in Berbice, and not meters on Exxon oil pumps.
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