The 2016 Stabroek Block Production Sharing Agreement (PSA) is replete with provisions that only grant massive tax concessions to the foreign suppliers of ExxonMobil, Hess Corporation, and CNOOC Group.
However, with the passage of the Local Content Legislation, this lopsided provision that puts local companies at a competitive disadvantage now comes to an end.
According to Vice President, Dr. Bharrat Jagdeo, Guyanese companies that wish bid for contracts in the oil industry can do so net of taxes.
During a press conference at the Arthur Chung Convention Centre (ACCC), the economist said, “…We are going to end this…We will give direct instructions that when you bid for any job, you bid on the same basis as any foreign firm… you submit bids net of taxes. So that is why I am pointing out that wherever Exxon passes on its fiscal benefits to foreign suppliers, locals must get the same treatment… locals cannot be placed at a competitive disadvantage and we are firm on this.
He was keen to note that the government’s efforts to ensure locals get the support they need do not stop there. The Vice President noted that during consultations on the Local Content Policy and law last year, there were concerns from some actors in the private sector that while they may get a contract, they cannot raise money from the bank using the said contract as collateral.
Jagdeo said however that efforts are underway to address this. The economist said, “This has a lot to do with our commercial banks and instructions from the Central Bank and how we treat collateral and what we can use as collateral. But the Minister of Finance and I will possibly be part of a meeting to ensure we work out an arrangement where people can raise funds against verified contracts that they win already.”
“This happens in a lot of countries too…,” he concluded.
