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Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia, is willing to protect Guyana from oil companies that may have intentions to cheat the nation of its revenue. But will he be able to so? Chartered Accountant, Christopher Ram thinks that it will be no easy task. He says the odds are against Statia.

Ram said that Statia’s “good intention” is not enough to save Guyana. He added that with little or no rules, regulations and laws in place to aid his work, the Tax Chief may have an uphill task keeping oil companies in check. Ram, also an Attorney-at-law expressed concerns about the low equity injection and high borrowings (thin capitalization) being pursued by the three contractors operating in the Stabroek Block Hess, CNOOC Nexen and Esso Exploration and 3roduction Guyana Limited (ExxonMobil’s subsidiary). His concerns really stem from the fact that Guyana has agreed to stand the cost of the interest on all loans secured by the three companies. The annual returns of two of the three companies operating the Stabroek Block showed that their exploration costs were financed by loans from their parent companies. Since one of those companies Hess Guyana Exploration Guyana Limited (Hess) had not filed annual returns since its registration in 2014, it is not possible to determine the source of its financing. Still, Ram said that it would be a safe bet that Hess was financed by inter-company borrowings. The total intercompany debt of Esso in 2016 alone was $76.9B of which approximately $60B was incurred in 2016. Ram said, “An obvious question is whether the Guyana branch is being charged interest on massive debt. An equally obvious answer is that we do not and cannot know because of the sparse information offered in the financial statements.” Here is what those statements say about intercompany debt “This amount represents amount due to Home Office as well as intercompany loan utilized to fund petroleum operations.” The problem with interest financing when it falls under cost recovery is that the higher the loan, the higher the accumulated interest to