Introduction
In this week’s column, I continue to review the national debate on Guyana’s Government Take from its petroleum sector, focusing on issues of its measurement, based on an acceptable definition. Here I recommend the commonly used definition as standard. That is, “the total effect of Governments’ fiscal terms on the cash flow of each oil field, summed-up for the country as a whole, and expressed as a percentage”, or as Rystad Energy formally puts it “The average government take for each country is the net present value (NPV) of the government take divided by the sum of the NPV of free cash flow and the NPV of government take”.
I have previously indicated the range of applicable fiscal terms that are covered in this measure. Of note, no retail taxes on petroleum products are included. Further, the emphasis is on the totality of the fiscal terms as a package. Experience clearly indicates that fiscal terms are adjusted/ improved, when working with them reveal impediments. In this sense, no country’s “PSA” is fixed in stone. All PSAs evolve/improve in time, wherever this is deemed necessary.