Taxation and the Petroleum Laws
The column today seeks to demystify the question of taxation and the oil companies. It is almost depressing the extent to which some persons, including officials, continue to misrepresent the true position regarding the confidentiality of the oil contracts and the payment of taxes by oil companies. I found it astounding that an online oil and gas blog earlier this week quoted a “source” defending the secrecy surrounding the petroleum agreement on the grounds that it has over a thousand clauses!
That is such nonsense and it is regrettable that the relevant authority has not sought to correct such rubbish. In fact, the model petroleum agreement has thirty-three Articles. That is the model which is given to all the oil companies around which negotiations take place. The model was so generous to the companies because of the low probability of finding oil that there was little, if anything to negotiate. That model contract is widely available but no one wants to make the time to read and analyse it. Continue reading Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 12)
Today we conclude our review of the Petroleum Commission Bill which was begun last week in Part 10. Readers will recall the critical review and adverse comments on the composition and appointment of the Chairman and the eight members of the Board of the Commission who will serve for mere one-year periods after which they may or may not be reappointed. It is instructive to note that under the Ghana Petroleum Commission Act on which the Guyana Bill has been patterned, directors are appointed for three years! Continue reading Every man, woman and child in Guyana must become oil-minded (Part 11)
The National Insurance Scheme holds 8% of the issued shares in Demerara Distillers Limited (DDL) while Secure International Finance Company Ltd owns 18.49%, a combined percentage of 26.49% of the company’s issued shares. My first-hand information is that both the NIS and Secure International have been trying for years to have a seat or two on DDL’s Board so that they can have a say in the strategic decisions of the board, exercise some control of the executive management and have access to the operations of the company.
I am advised that on every occasion their request has been rebuffed by one or both Mr Samaroo and Mr Persaud, one of whom, in the eternal tradition of the family property, is the current inheritor of the executive chairmanship of the company from the other. What makes this situation so strange is that, on paper at least, Messrs Persaud and Samaroo own only 0.27% of the shares in DDL. An examination of the shareholdings in DDL suggests that what one sees is not necessarily the effective or beneficial shareholding in the company. Continue reading Corporate governance in the two most prominent public companies defined by the personalities, interests of their top executives
The contract confidentiality debate
The petroleum contracts signed with oil companies has featured prominently in public discussions and letters in the print media during this week. In fact, a letter in the Stabroek News on Wednesday by Mr. Ramon Gaskin calling for disclosure of the oil contracts provoked an immediate response by Minister Raphael Trotman who wrote that the Government has received expert opinions and advice against publication. The difference between the two gentlemen is around the language of section 4 of the Petroleum Exploration and Production Act.
Mr. Gaskin is adamant that the language of the law is clear and accused the Government of peddling inaccurate information to the public. For his part, the Minister describes the Act as “somewhat ambiguous” and that it should be interpreted in a manner that prevents publication. Continue reading Every man, woman and child in Guyana must become oil-minded (Part 10)
The absence of or rather failure to appoint inspectors and a Chief Inspector was highlighted in last week’s column. The seriousness of that failure lies in the fact that the Chief Inspector is the person with direct responsibility for the administration of the sector, to manage the oil companies, so to speak. The last Administration failed to do so for around twenty years and cannot use as an excuse that oil was not a big deal then. After all, thousands of hectares of potentially mineral rich resources offshore were given out to oil companies which by law should be supervised by the Chief Inspector and inspectors appointed by the Minister. The exploration phase is admittedly light on expenditure but it does give operators exclusive right to carry out prospecting activities in the blocks for which they receive a prospecting licence.
It was therefore careless in the extreme that even after the establishment of a natural resources ministry, the PPP/C made no such appointment. Of course, that gave the Minister extensive influence over the oil operators, which was probably the objective. Then came the APNU+AFC Coalition which has also failed to act a full two years after a significant oil discovery with the likelihood of more to come! Continue reading Every man, woman and child in Guyana must become oil-minded (Part 9)