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PNCR asks Jagdeo to address concerns over interest rates charged by ExxonMobil
Vice President Dr. Bharrat Jagdeo and PNC/R leader Aubrey Norton
…says mismanagement of the oil sector constitutes a criminal offence
Kaieteur News – The People’s National Congress for Reform (PNC/R) has asked the Guyana government to clarify the interest/equity fee Guyana is paying to oil giant ExxonMobil for its investment in the Stabroek Block.
In a press statement on Tuesday, the main opposition party called on the government to clarify whether ExxonMobil charged interest on its investment in the Stabroek block and, if so, at what rate. In its strongly worded statement, the People’s National Committee/Republican Party argued that the reluctance of Vice President Bharrat Jagdeo, who is in charge of the oil sector, to fully disclose information on the matter was “unacceptable”.
Just last week, the Vice President faced criticism from Kaieteur News. Jagdeo However Refuse to resolve The rate of return charged by oil companies.
The PNC/R pointed out that the matter is of great importance, as tens of billions of dollars have been invested to date to develop the oil fields. Therefore, the party pointed out that even if the interest rate is only 5%, it will cause huge losses to the country. For this reason, the political group pointed out that Guyana may lose billions of dollars in lost revenue.
“These funds could be used to alleviate the cost of living crisis, increase wages, fight poverty and meet many other urgent needs,” the PNC/R said.
As such, the party argued that “his (Jagdeo’s) disregard for the responsibilities he assumed as the PPP’s oil dictator is an infringement on the well-being of every Guyanese… His cavalier attitude in this and other matters in the oil industry constitutes criminal dereliction of duty.”
PNC/R further elaborated on this issue and drew attention to Annex C of the 2016 Production Sharing Agreement (PSA), which provides that interest expenses can be recovered without Ministerial approval if they are “consistent with market rates”.
However, the party found that in the first audit of ExxonMobil’s costs incurred between 1999 and 2017, commissioned by the coalition government, the document clearly stated on page 4 that the company had not recovered any interest costs. According to the report, “Interest and financing costs were recoverable under the 2016 PSA. However, EEPGL confirmed during the audit that no interest or financing costs were included in the cost recovery – and the audit team has confirmed that the amounts presented in the fourth quarter 2017 cost recovery statement do not include any interest or financing costs.”
However, no such clear and direct statement was included in ExxonMobil’s second audit. The $7.3 billion cost recovery audit for the period 2018 to 2020 was commissioned by the PPP.
Since the production-sharing law allows interest charges to be recovered without ministerial approval, the party warned that any audit lacking the necessary thoroughness would not automatically flag these charges when they appear in the cost recovery bank, especially when the Stabroek Block operator says Guyana is not charging interest for the development project.
“It is therefore incumbent upon the Government of Guyana, at a minimum, to monitor quarterly fee reports to determine if interest is being charged and to raise this issue with operators if they are not delivering on their promises,” PNC/R explained.
The party was keen to point out that the second audit, in dealing with the issue of withholding tax (Exception 17), indirectly suggested that interest was being charged. Therefore, PNC/R said this raises several questions; chief among them being whether this is indeed the case, what the interest rate is and how it compares to market rates.
“It does not take much effort on the part of Jagdeo to set the record straight. Such a demand must be made by the people of Guyana… Billions of dollars of national heritage are at stake. Going forward, auditors must be directed to pay close attention to the issues at stake and provide detailed and specific comments,” the Opposition party urged.
Additionally, the group noted that the government must also keep a close eye on spending reports to document any interest charges. “If interest is indeed charged, they must hire an operator to recover those funds and report to the state. When so much is at stake, the government cannot proceed blindly,” PNC/R said.
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