Ram says NRF does not reflect full amount of royalties due
Chartered accountant and commentator Christopher Ram has added his voice to recent concerns that the National Resource Fund (NRF) does not reflect the full total of petroleum royalties due to Guyana.
In a column that appears in today’s Stabroek News, Ram said that based on his calculations, some US$73.8m of royalties are unaccounted for.
He noted that a letter by Professor Kenrick Hunte that appeared in Kaieteur News had raised the issue. A letter by Candice Dorwish in the February 25, 2024 edition of Stabroek News had also raised this concern.
Ram quoted the rejection by Vice President Bharrat Jagdeo of Hunte’s argument. “Royalty is calculated on production minus, so total crude production minus the crude used in the operations for transport and on the FPSOs (Floating Production
Storage and Offloading vessels). In Guyana’s case, the FPSOs are operated by gas, so there is no deduction whatsoever, so royalty is calculated on the basis of total production and total sales. There is no deduction whatsoever. Every month, they have to confirm what the average price would be, the weighted average, and the [government] gives approval for that”.
Ram in response said it does not appear that the Vice President has bothered to read the 2016 Production Sharing
Agreement (PSA), let alone its reference to the Petroleum Exploration and Production Act and its definition of “petroleum”.
“In fact, the very first item in the definition of `petroleum’ is this: `any naturally occurring hydrocarbons, whether in a
gaseous liquid or solidstate’. Does the country’s petroleum czar not know that billions are charged to operations annually for supplies to the oil companies by at least one oil distributor? His answer was not only completely wrong, but shockingly misinformed, misleading and a total misrepresentation of reality. If this is Jagdeo’s knowledge of the petroleum sector, then President Ali has to step in, lest things get worse than they are”, Ram argued.
In his calculation of the royalties, Ram pointed out what the PSA prescribes about “royalties”.
‘The Contractor shall pay, at the Government’s