The incumbent APNU/AFC Administration has this morning released part of the Petroleum Prospecting Licence inked with United States oil giant (ExxonMobil) in 2016.
The 75 pages document that was released, has revealed after a cursory perusal that the licence will last for a period of four (4) years, subject to a renewal period of three (3) years upon expiring.
Moreover, it states that the ‘Contractor’ will be required to pay to the Government US$1M for every year that the licence is in force.
Article 10 of the released contract states “the Contractor shall on the Effective Date of the Petroleum Prospecting Licence or date of the grant of any Petroleum Production Licence as the case may be and, thereafter, so long as the said Licence remains in force, on each anniversary date thereof, pay without demand to the Government an annual Licence rental charge of one million United States Dollars (US$1,000,000.00) in respect of the Contract Area for the entire Exploration Period and such pavements shall apply to those areas remaining after taking into account any relinquishments pursuant to Article 5 as specified below.”
Moreover, it states that payments “under this Article 10 shall be paid directly into bank accounts held and controlled by the Government of Guyana. Contractor shall verify such bank accounts and the Minister agrees to cooperate, assist and provide Contractor any information it requires to conduct such verification.”
What this means is that in addition to the US$18M that Government received as a signing bonus-which according to the contract was deposited into a bank account not more 15 days after the contract was signed- it would have also received US$1M as a “Licence rental charge” for every year that the contract was in force.
The contract between ExxonMobil and the Government was signed in October of 2016 and with October of 2017 long gone, Government should have been paid $US1M rental as stipulated by the contract.
Contentions were raised by the Opposition, among other concerned stakeholders, that the US18M signing bonus, which was kept a secret by the incumbent Administration, should have been deposited into the Consolidated Fund and not a Bank of Guyana account as was the case.
The arguments advanced by those parties was that it was a breach of the Fiscal Management and Accountability Act (FMAA) as well as the Constitution to not have the monies deposited into the Consolidated Fund.
It appears, based on the wording of the contract that the US$1M annual rental fee will also be placed into a bank account/s of Government’s choosing and not the Consolidated Fund, which the legal, political and economic pundits have argued is the right course of action.
At this point in time, it is not clear whether Government actually received US$1M from ExxonMobil, however, the oil giant is scheduled to hold a press conference later today.