Dear Editor,
Can the Oil Contract entered into by GoG and Exxon be a matter of “Private law’’? Minister Trotman signed an Oil Contract (parties: Exxon and GoG) on behalf of GoG in 2016. Publisher of KN, Glenn Lall, is suing in the Courts to have the Taxation Articles and Clauses of this contract explained and amended or, be declared null and void, because it may have collided with other basic clauses of the Constitution and other Statutory Laws of Guyana.
The citizens of Guyana do not understand the tax provisions of this Contract: Has it been waived for the Oil Companies, then why is Minister Bharat paying taxes on behalf of Oil Companies? Elsewhere in the press, it is reported Minister Bharat is not paying anything to the Guyana Revenue Authority, he is just issuing receipts for taxes paid, when in fact the Oil Companies pay zero tax. Perhaps the lawsuit would explain and clarify these complex and confusing issues. (Mr. Bobby Gossai made a statement on Globespan a few months ago that his office does issue receipts to the Oil Companies for taxes paid – he also promised to post the receipts up on his Ministry’s official website. He has not done so yet).
In an affidavit signed by Mr. Bobby Gossai, who works for the Ministry of Natural Resources, he stated that the Contract entered into by GoG and the Oil Companies is a matter of “private law”. Editor, I am extremely perplexed by this statement. Can such a Contract that deals with the natural resources of Guyana and that are often described as the “patrimony of the nation” be a matter of private law? “Public laws” affect the whole society and that means the whole State. “Private laws” on the other hand affect an individual, family, or a small community or district. Editor, I am of the view that this Oil Contract cannot be a matter of private law. Editor, could you append a note at the end of this letter to help me as well as the readers understand whether this Oil Contract can be a matter of “private law”?
I am also perturbed about another question regarding Mr. Glenn Lall’s lawsuit. Why is GoG opposing this lawsuit? A standard PSA contract provides for three streams of revenue: royalty, profit share and corporate income tax (profits’ tax). The Guyana Oil Contract provides only for royalty and profit share. Profits’ tax has apparently been waived for the life of the contract. Mr. Lall’s lawsuit seeks to find answers as to why the profits’ tax has been waived – is it legal and constitutional? If it collides with particular Articles and Clauses of the Constitution and Statutory laws, then the Courts must rule on this matter. Editor, permit me to show a poster illustrating a comparison with the Suriname Oil Contract. http://www.oggn.org/wp-content/uploads/2021/12/suriname-vs-guyana-contract.png
Readers will note Suriname collects a corporate tax rate (profits’ tax) of 36% on Oil Companies profits while Guyana collects zero profits’ tax. If the reason for this discrepancy or irregularity lies in Guyana’s laws, why didn’t the GoG amend its tax laws? Doesn’t the GoG have an interest in making sure it collects fair value for its oil resource? Editor, permit to give an example of how much Guyana is losing by not being able to collect profits’ tax from the Oil Companies. Guyana’s profits since production began are an approximate $600 million excluding royalty. Therefore, Exxon and partners’ profits would also have been $600 million. If the Oil companies were required to pay a minimum profits’ tax rate of 15%, that would have yielded $90 million. This is money lost to the National Treasury. If GoG is interested in making this contract a little more equitable, less lopsided, why is it opposing Mr. Glenn Lall’s lawsuit?
In conclusion, I feel constrained to state that this Oil Contract has been a matter of public shame – a humiliation of the Guyanese people. It had been widely reported in the Guyanese press that Minister Trotman said he had been instructed to sign the contract. We can reasonably infer from his statement that there had been no negotiation – the contract was simply handed to him, he did not read it – and as per his instruction from some higher up person, he signed it. Given these known facts and circumstances of how this contract came into being, it is unfathomable that the current GoG is going to court to essentially support all the provisions of this contract; to oppose any movement seeking a less lopsided contract.
Sincerely,
Mike Persaud
