It appears that significant portion of oil revenue will be diverted from Natural Resource Fund to GRA

Dear Editor,

It appears to me that the integrity of Guyana’s Natural Resource Fund will be violated right from the start by an apparently unintended consequence of the income tax arrangements made with Esso Exploration and Production Guyana Limited, also referred to as the “Contractor” in the Petroleum Agreement between Guyana and EEPGL.

My understanding is that ALL petroleum revenues are to be directly deposited into the Natural Resource Fund, instead of the Consolidated Fund, to facilitate and ensure the laudable objective of superior, independent, non-partisan, apolitical and unbiased supervision and oversight.

Yet, Article 15, Section 4, paragraph (b) of the Petroleum Agreement states that the Minister hereby agrees: “that the appropriate portion of the Government’s share of Profit Oil delivered in accordance with the provisions of this Agreement shall be accepted by the Minister as payment in full by the Contractor of Contractor’s share of each of the following levies, whatsoever the applicable rate of such levies may be, which the Minister shall then pay on behalf of the Contractor under Article 15.4 (a) to the Commissioner General, Guyana Revenue Authority or such successor authority:”

The next paragraph lists “the Contractor’s share of income taxes”, “Corporation tax” and “any other similar charge”.

Editor, I am not a lawyer or an accountant, but it appears to me, that a significant portion of the revenue from Profit Oil will be diverted from the Natural Resource Fund to the Guyana Revenue Authority in order to enable the tax treatment outlined above.

Will this “Contractor tax revenue” be immediately restored to the Natural Resource Fund?

Yours faithfully,

Tulsi Dyal Singh, MD