I would like to follow up on SN November 18, 2021. The mere fact of declaring that an audit will be carried out does not mention whether the terms of the 2016 contract, article 23 and annex C will be renegotiated. There are also a number of unanswered questions that could protect Guyana’s interests. Will Guyana’s land and tax laws relating to the aforementioned 60 oil blocks that entrepreneurs could sell be renegotiated? Will capital gains on the sale of these Guyanese properties or oil produced and sold be taxable? Authorities need to go beyond regular audits, establishing that contractors have receipts for claimed expenses.
There are transfers of Guyana’s share of production and sales to multinational entrepreneurs disguised as taxes that the Minister must pay under section 15.4. Are such transfers permitted under Guyanese tax laws? And do Guyana’s laws allow the minister to obtain tax receipts from the Guyana Revenue Authority as a qualified taxpayer? Under the Profit Tax Assessment Article 15.4, what realistic measure of cost per barrel is used to determine profitability? All stakeholders should be interested in an audited and verified cost per barrel. Other unanswered questions without audit and verification are:
– What categories of costs are included in the maximum recovery of the entrepreneur’s capital at 75%?
– Are royalties paid from Guyana’s share of production and also included in costs capitalized at 75%?
– Or, are the royalties taken from the gross income before the 75%? The answers to these questions would determine what Guyana ends up getting in its sovereign wealth fund in each calendar year.
In an Oxfam report, reference was made to the difficulty of obtaining baseline cost data. This would compromise the entire audit if this information were to come from the audited contractor. The government website does not cover costs or downloadable data related to the production and the contractor’s quarterly expenses. On the income side, prices are determined by international markets. It doesn’t leave a lot of responsibility to the local offices. Would the public know how much is being claimed for one of these floating storage vessels? These are some of the unanswered questions that would determine how rich or poor Guyanese are.
Ganga Persad Ramdas