…says agreement contradicts Minister, prohibits impromptu visits
Former Attorney General Anil Nandlall is taking the Government to task for its utterances regarding its right to make impromptu visits to ExxonMobil’s operations, noting that the contract it signed with the oil giant prohibited this.
Recently, Natural Resources Minister Raphael Trotman was quoted in sections of the media saying that impromptu visits would still be carried out. Nandlall, in a statement on Monday, however, dismissed this as absurd.
Anil Nandlall
“How does Minister Trotman conceive the Government making impromptu visits to the oil operations when the contract expressly and specifically provides that the Minister, through his duly-appointed representative, must give at least seven days’ notice before they can be allowed to observe the petroleum operations conducted by the contractor?” Nandlall questioned.
“What this means is that the Government may attempt impromptu visits, but unless that seven days’ notice is given in the manner provided for by the contract, the contractor reserves the right to prevent the Government access to the operations.”
Questioning whether the Government meant to disregard its contractual obligations, Nandlall noted that the better thing to do was to acknowledge that they were in a conundrum. He pointed out that the clause restraining Government from inspections – Article Nine – was meant to prevent comprehensive scrutiny.
“More significantly, when the clause, which requires the seven days’ notice, is read in conjunction with other related clauses, one gets the clear impression that the collective intent of the contract is to prevent the Government from accessing certain type of data, in respect of the oil operations.
“For example, even where the seven days’ notice is given, there are express prohibitions against the Minister interfering with the petroleum operations and there are a whole host of records and reports, which are deemed “confidential” and to which the Minister has no access,” the Attorney-at-Law pointed out.
Meanwhile, taking on recent statements from Business Minister Dominic Gaskin whereby he urged Guyanese to not become distracted by the “tiny vocal minority”, Nandlall pointed out that the only persons supporting the contract have been members of the Cabinet.
“Apart from Cabinet Ministers, almost every organisation in Guyana and every major commentator are on public record making condignly critical remarks about the contract. The position is no different among the ordinary citizens, including supporters of the Government,” Nandlall said.
The contract
The contract was signed in June 2016 between the coalition Government, ExxonMobil and its partners in the Stabroek Block. While the contractor is obligated to maintain and submit all pertinent records, the Government can neither make impromptu visits nor interfere with Exxon’s operations.
Article 9e states that “The Minister, through duly-appointed representatives, upon providing the contractor with at least seven days’ notice, shall be entitled to observe petroleum operations conducted by the contractor at his sole cost and expense…”
It goes on to say that “in the exercise of such rights under this paragraph the Minister shall not unduly interfere with the contractor’s operations under this agreement”.
In Article 15 of the contract, Exxon is exempted from paying Corporation, Excise or Value Added Taxes on its earnings from petroleum. Article 15.4 also provides for the Government itself to pay the company’s Income Tax.
To facilitate this, the oil company has to submit tax returns to the Government. Article 32 also stipulates that Government cannot modify the contract or increase any fiscal obligation the company has.
This, therefore, puts a cap on the taxes, royalties, duties, fees, or charges outlined in the contract. Government also has to compensate the operator if a change to existing laws causes loss of revenue for the company.
According to Article 32.3, “If at any time after the signing of this agreement, there is a change in the laws of Guyana… and such a change has a materially adverse effect on the economic benefits, including those resulting from the fiscal regime provided by this agreement… the Government shall promptly take any and all affirmative actions to restore the lost or impaired economic benefits to contractor, so that contractor receives the same economic benefit under the agreement that it would have received prior to the change in law or its interpretation, application, or implementation.”
The contract goes on to say: “The foregoing obligation shall include the obligation to resolve promptly, by whatever means may be necessary, any conflict or anomaly between this agreement and any such new or amended legislation, including by way of exemption, legislation, decree and/or authoritative acts.”
