Vice President Jagdeo defends incentives given to oil companies
Vice President, Dr. Bharrat Jagdeo, sought to impress on Kaieteur Radio why it is important for oil companies to be granted incentives by the government, in an exchange with Kaieteur News’ publisher, Glenn Lall. The two debated that and several issues on Guyana’s Oil and You on December 23 last year, hosted by Kaieteur News’ Senior Journalist, Kiana Wilburg.
Dr. Jagdeo’s explanation featured after he admitted that the tax regime granted to ExxonMobil for its Stabroek block operations is too liberal, as it effectively requires the company, its partners, affiliates and subcontractors to pay no taxes. This has resulted in a situation where, as the country battles a pandemic, local businesses are chased after by the Guyana Revenue Authority (GRA) for outstanding taxes they are struggling to pay, while multi-billion dollar oil majors operate tax-free.
“I know from a country’s perspective that we have to get more”, the VP said, after committing that future petroleum agreements would feature fiscal regimes which are very different from that of the Stabroek block Production Sharing Agreement (PSA). Notwithstanding this, Dr. Jagdeo believes that it is important to incentivize oil companies because of the scale of investments they bring to these oil developments.
He said that the total assets in Guyana’s banking system amounts to USD 1.1 trillion, or about USD 5.6 billion.
Comparing this to the scale of investments being made by Exxon, the VP noted that the Liza Phase One project has an estimated cost of USD 3.5 billion, while Liza Two is estimated at USD 6 billion and Payara at USD 9 billion. The total cost of these three is estimated at USD 18.5 billion dollars.
“If we look at the three developments, that’s close to 20 billion”, Jagdeo said, comparing it to the money in Guyana’s banks. “To develop an offshore facility or any oil and gas industry far outweighs the capability of the country. Where are you going to get that money if you’re doing it? Don’t you understand the scale of it?”
(Kaieteur News)