Exxon pact should be rejigged to give 7% royalty -Goolsarran

-says gov’t has irreparably damaged its credibility

Former Auditor General Anand Goolsarran says that the agreement between Guyana and ExxonMobil should be renegotiated to give this country a royalty of 7% on oil produced instead of the current 2% and he also said that there should be a switch from a profit-sharing arrangement to a revenue-sharing one.

In his Accountability column in today’s Stabroek News (see page 8), Goolsarran also said that the government had irreparably damaged its credibility over its handling of the secret ExxonMobil signing bonus and he said the US$18m which is now at the Bank of Guyana should be immediately transferred to the Consolidated Fund and if not a judicial review should follow.

He said that assuming that 300 days will be worked for the year and a market price of crude oil of US$50 per barrel, the 2% royalty works out to US$30 million annually (i.e.100,000 x 300 x US$50 x 2%), or a mere 2.3% of the national budget.

“We strongly believe that the agreement with ExxonMobil should be renegotiated with a view to Guyana receiving a royalty of at least 7% instead of the current 2%. This is in addition to switching from a profit-sharing arrangement to a revenue-sharing one… the negotiating team should be a tripartite one, comprising Government, the Political Opposition and Civil Society, each with equal standing”, he stated.

Adverting to media reports, Goolsarran said that Minister of Finance, Winston Jordan is adamant that the controversial US$18 million signing bonus should not go to the Consolidated Fund on the grounds that: (i) the Fund is heavily overdrawn; and (ii) any transfer to it would be “swallowed up” by the overdraft.

Goolsarran noted Jordan further stated that whenever the Government decides to use the money, the necessary transfer would be made to the Consolidated Fund and a request for a Supplementary Estimate made to Parliament for its use. The former Auditor General pointed out that a similar statement had been made by former President Bharrat Jagdeo in relation to the Lotto funds. Regrettably, Goolsarran noted that Jagdeo demitted office without honouring his commitment.

Goolsarran argued that the fact that the Consolidated Fund is heavily overdrawn is no justification for violating Article 216 of the Constitution.

“The argument flies in the face, considering that it was from this deficit position that the National Budget for 2017 was financed. And in all probability, the Consolidated Fund will be in greater overdraft by the end of 2017, yet a budget of G$267.1 billion (has been presented). Besides, the signing bonus is a mere 1.4% of the National Budget. The Minister’s explanation also ignores Section 38 of the FMA Act which requires all public moneys raised or received by the Government to be credited fully and promptly to the Consolidated Fund”, Goolsarran argued.

Adverting to a statement by President David Granger on Friday justifying the non-disclosure of the bonus on the grounds of national security and for ease of access to pay legal fees connected to the Venezuela controversy, Goolsarran said that the President overlooked the fact that the Contingencies Fund has been specifically established by the Constitution to deal with emergency funding situations. Goolsarran further pointed out that at last Friday’s press conference, the President continued to insist that there has been no illegality but stated that if advised otherwise, he is prepared to take corrective action.

“As it now stands, the Government has itself to blame for the imbroglio. It has caused the irreparable damage to its credibility as well its efforts to securing good governance, transparency and accountability. Its candidate membership of the Extractive Industries Transparency Initiative (EITI) is now in jeopardy. The EITI has promulgated standards to which participating countries are

required to observe, including the publication of timely and accurate information on key aspects of their natural resource management, how licences are allocated, how much tax and social contributions companies are paying and where this money ends up in the government. Those standards have been breached in respect of the signing bonus from ExxonMobil”, Goolsarran charged.

Noting that he had argued previously for the return of the signing bonus to ExxonMobil on moral grounds, Goolsarran said given that this is unlikely to happen and because there is no constitutional or legal obligation to do so, the Government must now transfer the money to the Consolidated Fund.

“This will enable Parliament via the National Budget to decide how it should be used, not the Executive. If the Government fails to do so, a judicial review should be sought. We must not repeat the experience of the National Industrial and Commercial Investments Ltd. (NICIL) where State revenues totalling some G$26 billion were intercepted during the period 2002 to 2014 and used to meet expenditure without parliamentary approval. A similar occurrence took place in respect of the Lotto Funds where hundreds of millions were diverted each year”, Goolsarran contended.