Dear Editor,
I refer to a letter written by Joel Bhagwandin entitled: `Financing of the gas pipeline falls under the PSA, section 2.2 (d)’ in SN on January 10th.
In this letter the writer claims that the pipeline in question is the same as the FPSOs which produce Guyana’s oil, in that they can both be cost recovered. The writer seems, however, to be unaware that the Government of Guyana does not own the FPSOs that reside offshore. Per the reported contracts signed with the companies that have built them, they are to be owned (if at times eventually) by the operator. On the other hand, if the government of Guyana were to purchase FPSOs for itself it would require parliamentary approval (in exactly the same way parliament must approve funding for the purchase of police vehicles, as has been cited by Ramon Gaskin). Since the Government of Guyana has stated an intention to own the pipeline in question, it must therefore approach parliament for funding. It is perfectly within the terms of the PSA for Exxon and its partners to own a natural gas pipeline, and for them to cost recover it, in the course of natural gas production. The Government of Guyana and Exxon, however, are to my knowledge not the same entity. Further, I will point out a few of the worrying consequences that come from dismissing the alarming arrangement the government may have tied itself to. Mr. Bhagwandin cites that Exxon can under the PSA build and cost recover roads and various port facilities. Could it not then be conceivable that a wide range of national infrastructure projects could be subject to this scheme? Could we not see billions of dollars extracted from cost oil before they even touch the Natural Resource Fund or parliament? This, of course, is exactly what Hugo Chavez did in Venezuela, asking PDVSA, the state-owned oil company, to fund a wide range of programmes, in order to avoid parliamentary scrutiny. It is thus no surprise that that country’s finances imploded spectacularly.
I always find the Washington Post’s motto, “democracy dies in darkness,” quite instructive.
PDVSA is notorious for not publishing financial reports and as it stands not only are we yet to see the audit of Exxon’s $7 billion USD costs-recovery bill, we are still to lay eyes on the audit of its over $400 million USD pre-contract costs. Any government which conceals these audits, while simultaneously bypassing parliament for potentially billions of US dollars in spending, is leading us down the same path as Venezuela.
Parliaments exist for a reason, and that reason is to ensure citizens’ interests, whether financial or otherwise, are represented at the highest levels. No matter how convoluted the scheme to bypass it, we must not forget the basic value of this treasured institution. Finally, let us recall that the agreement the government has with Exxon to build and operate this pipeline is not public.
We don’t even know the agreed price that the natural gas in the pipeline will be supplied at.
That these vital agreements are secret is a troubling thought indeed.
Yours,
Elson Low,
Economic and Youth Advisor to the
Leader of the Opposition.