Given that Guyana pays the taxes of the oil companies (EMGL, Hess, and CNOOC), and recognizing that Guyana should receive 14.5 percent of total revenue, the question which must be answered is the following: How much money will Guyana receive after the taxes have been deducted from Guyana’s share of total revenue? The answer to this question is as follows: Based on the 2023 Financial Statements of EMGL, Hess and CNOOC, and the condition in the Production Sharing Agreement (PSA) Article 15.4 (a), Guyana net-take of total revenue is not 14.5 percent, but 1.5 percent of total revenue and the details are in Table 1 below. Total Revenue for 2023 is G$2.36 trillion; and from this amount, a total of G$342.3 billion is the sum of royalty and taxes, which is equivalent to 14.5 percent of total revenue.
The total income tax for 2023 is G$306.8 billion or 13 percent of total revenue. Consequently, if Guyana is entitled to 14.5 percent of total revenue, but Guyana has to pay from its share of revenue the taxes of the company (13 percent of total revenue), then Guyana’s net-take is only 1.5 percent of total revenue. For a country that owns the non-renewable natural resource and is labeled as the Non-Owner Associate (NOA), can this be a fair deal? Additionally, recognizing that the tax give-away (G$306.8 billion) is larger than the profit share (G$295.1 billion); and acknowledging that the tax give-away is more than 6 times the amount of the royalty, this outcome confirms the existence of a lopsided PSA that will not become more equitable without renegotiations.
It is therefore contended that renegotiations must include ring-fencing, as this will allow each project to have clearly defined revenues, costs and returns, and especially a timeline and schedule for paying down the capital costs for each project. Additionally, Guyana should seek assistance from Trinidad and Tobago, and join the OECD Inclusive Framework on Base Erosion and Profit Shifting in which there over 145 countries, among which are several CARICOM countries (https://www.oecd.org/en/topics/policy-issues/base-erosion-and-profit-shifting-beps.html).
Get the job done Guyana, for 1.5 percent of total revenue is an indication of poor governance and serious mismanagement of a critical non-renewable resource. And remember, future generations will hold you accountable; and as such, action must be taken now to rectify this unnecessary burden on the Guyanese people.
Sincerely,
Dr. C. Kenrick Hunte
Professor and Former Ambassador
