The stability of Guyana’s Wealth Fund is predicated on slippery unknowns
Guyana’s Assessed Tax Liability, US$5.391 billion for the Petroleum Contractors is an outrage. Instead of securing funds for floods, sea defenses, and compensation to farmers for crop losses, the money deposited at the Federal Reserve of New York must now be used to pay Guyana’s tax bill, a situation that will reduce Guyana’s Petroleum share below 12.5%; 50/50 share as stated in the Agreement. That 2016 Petroleum Agreement has open ended provisions well beyond the annual 75 percent Capitalized Cost Recovery each year, with further provisions for loss carry-forward plus un-disclosed amounts or un-audited prior-year’s exploration costs; very slippery unknowns. There appears to be no certainty with the stability of Guyana’s Wealth Fund with the open-endedness in cost recoveries.
As an outside-the-Guyana-Budget natural resource exploitative set of industrial and financial activities, these are expected to be scrutinized by the Guyana Parliament with full accountability as these transactions are brought into the National Budgeting and Accounting
System of heads and sub-heads subsidies to the Oil Companies. I strongly believe that the 2016 contract itself is defective because it transfers Guyana’s wealth that benefits the oil contractors’ parent companies, their buddy-subsidiaries, and their shareholders using Guyana’s tax laws, without a Parliamentary debate. The Guyanese public and the Diaspora are groping for information, especially on production and exports of the petroleum industry. One wonders what numbers will enter into the National Gross Domestic Product.
A country that disrespects its own laws is likely to encourage widespread tax evasion and lawless behaviour elsewhere, from top to bottom. My recommendation is that Guyana’s 50/50 production share be kept at the same level as Esso’s share, a company that does not have a country to manage or develop, and include Guyana’s Assessed Tax Liability in the 75 percent capitalized cost recovery each year. These amounts are not even the rounding-error of a line item in the giant multinational oil company’s financial statements.