Oil and development

Sep 12, 2024 Editorial

Kaieteur News – Close to five years as an oil-producing nation, what Guyana has to show for it? We often hear about how much money this country gets from its oil wealth and while the little being received is more than what we were getting before first oil, the leaders of this country continue to rob its citizens of a good life owing to their inept policies.

We reported earlier this week that ExxonMobil Guyana Limited (EMGL) did not have to pay over $197 Billion in taxes to the Guyana Revenue Authority (GRA) for the past two years, as the taxes were paid by the Government of Guyana (GoG) in keeping with the lopsided Production Sharing Agreement (PSA) the Coalition Government signed with the US oil major back in 2016. Yet, despite numerous calls for a change of the contract to allow the oil companies to pay their rightful share of taxes, both the government and opposition have been steadfastly holding on to the sanctity of contract nonsense.

According to Exxon’s Annual Report, in 2023, the Government paid G$138.182 billion in taxes on its behalf to GRA. This figure represents a significant increase compared to the G$59.381 billion Government had to pay for Exxon in 2022. The company explained in its report, that while it is subject to Guyana’s income tax laws, the taxes assessed on the company’s operation are paid by the government, rather than the company itself. “Under Article 15.2 of the Petroleum Agreement, the Branch is subject to the Income Tax Laws of Guyana with respect to filing returns, assessment of tax, and keeping of records. Under Article 15.4 of the Petroleum Agreement, the sum equivalent to the tax assessed on the Branch will be paid by the Minister responsible for Petroleum to the Commissioner General, Guyana Revenue Authority and is reported as non-customer revenue,” Exxon stated. The money this country is giving up by waiving taxes to Exxon can fund many of the projects government is undertaking through loans. And instead of the $25,000 cash handouts and the small school children grant, citizens could have been better off.

On top of this massive money numbers are thrown around by political leaders, but there is a noticeable absence of meaning for citizens in the kind of quality of living experienced. The foreign companies keep coming, and they are making a financial killing from the inception. Reportedly, hundreds of them are interested in doing business here. They only stir to do so, when they are assured of rich profits; otherwise, there is merely lukewarm reaction, if any at all. They are mostly Americans, who first skim the cream (all of it) and then carry away the milk, which is their just reward for the democratic inspirations that they laboured so intensively to deliver here. Second, while the Americans and Europeans, the new waves of the 21st century model of voracious colonisers, reap the rich crops, many Guyanese are still straddling the lines of stifling poverty, chronic crime insecurity, acute political venality, and individual, family and communal dependency. Third, this is most evidenced in two realities: quality jobs and quality of life standards.

It would be interesting in the thousands of jobs promised by the government, how much of such represents a net change on the upside with employment, given all these commercial arrivals, and the related flurry of investments, projects, and activities. Fourth, our local blue chips are careful to position themselves sensibly, and operate quietly under the radar, so as to evade unwanted attention; but they are in the hunt, and they are picking up lucrative partnerships and business opportunities. It is local content harvesting for the top notch, old-line firms and names, and seemingly automatically. The ordinary Guyanese man and woman, eternally expectant, are left on the margins, as usual; and with disappointments and yearnings the norm.
Moreover, we have heard about several billion-dollar (U.S.) projects and borrowings, for factories and plants and housing and much more. Yet we are still to hear anything of one squatting area regularised, one depressed area (or slum) that has been rehabilitated. Or one place earmarked for prioritisation as a model of where some of the fruits of all this borrowing and activity and visions are materialising.

Instead of such political and leadership idealism taking hold, there is a new and unprecedented set of circumstances now at work in Guyana.  First, there have been the discoveries of billions of barrels of oil and oil equivalents, and the fevered excitements they trigger. Next, there is this sudden and unfamiliar availability of billions of U.S. dollars in free-flowing funding, which prompts borrowing of those many easy billions. The combination of the two (billions of barrels and billions in available loans) has served to unleash market forces of a kind and variety never encountered here before. There is the traditional corruption by agents of the state, elected and selected, but nowadays, in the heyday of oil, there is this costly new strain involving much siphoning off in pre-market and other underhanded contractual dealings. The fingerprints and modus operandi of known political players are there for those who care to dig deep. It is why they hide and break dance unsuccessfully.
Moreover, we have been hearing that hundreds of foreign companies are interested in coming here to do business, which is to be expected. But from our perspective, this is not so much about exploration and production, as much as it is about a full-fledged occupation, an upstream and downstream oil grab. In the convulsions of deal making, what we have is an army of capitalist mercenaries, whose only loyalty is to money.

• Development, Editorial, EMGL, Guyana, Nation