Dear Editor,
I was awaiting President Granger’s response to the scandalous revelation of enormous proportions that after repeated denials from his government including from none other than the Minister of Finance, Winston Jordan, that Exxon had paid the government a signature bonus before seeking an opportunity to offer my comment on the matter.
First, Mr Granger cited the blanket but expected “national security” justification as the sole reason for both adopting that payment mechanism and non-disclosure which eventually turned into nothing short of an untruthful or deceptive denial. The obvious flaw in Mr Granger’s “national security” explanation is that now the information about the signature bonus is out in the public domain for the entire world to see how, then, is our national security position jeopardised? And if it is jeopardised then what national security measures have been implemented to abate the purported imminent threat to our national security position immediately after the exposure? The truth is a signature bonus in this context is an advance payment by a company based on the expected profitable extraction of a natural resource and it is, therefore, nothing other than revenue. Revenue paid to a government by an oil company can never be a national security issue and it is totally ridiculous for President Granger to even think of offering “national security” as a sensible explanation.
Second, Guyana has a high quality of oil and the discoveries have made Guyana the most attractive oil and gas basin in the world, so could it be that the real reason is that the US$18M signature bonus was not the best deal that Guyana could have obtained, given that many other countries had obtained far more, eg Angola which obtained US$1.1B in 2006 and Brazil, US$700M. Could it also be that the avoidance of scrutiny is why the contract was not being released for so long despite formidable public pressure?
Third, Granger’s government seeks on an almost daily basis to impress upon the Guyanese people that they are capable of prudently developing and managing Guyana’s new oil and gas sector and the revenues that flow therefrom, but their very first experience with any significant revenue from our oil and gas sector even without the commencement of production is clouded in disturbing deception and scandal. This single act vaporises any possible hope that President Granger and the APNU+AFC government could have had to prudently steward Guyana’s oil and gas resource.
Finally, a signature bonus is not free money as may be presumed. It is money paid in advance as described above with an interest rate attached. This interest rate in the oil and gas industry (normally referred to as ‘the discount rate’) is standard between 10-15% which means that the interest rate is higher than if Guyana were to obtain loans from other countries or international financial institutions. So, since Mr Granger is expected to host a press conference today for the first time in over two years then maybe it would be useful for the media to find out what is the interest rate attached to that signature bonus.
Yours faithfully,
Charles S Ramson
Attorney-at-law
Former Member of Parliament
