Home Top Stories Govt declines ExxonMobil’s request for 100 duty-free vehicles
In a move to push local content, the Guyana Government has rejected a request from United States oil major, ExxonMobil, to import 100 vehicles to be used here.
This was disclosed by Vice President Dr Bharrat Jagdeo during a press conference on Thursday.
According to Jagdeo, the US oil giant wanted duty-free concessions to bring in these pick-up vehicles but government declined this request so that local businesses could benefit from this opportunity to provide transportation services to the emerging oil and gas sector.
“Exxon wanted a fleet of over 100 vehicles, duty-free, to bring them in. And we said no, you’re not eligible. We’re not giving you – a fleet of 4×4 [pick-ups]. And we did not give the concessions. We did not believe they’re eligible and that would’ve undermined the business going to locals too,” the Vice President stated.
This revelation comes on the heels of criticisms by some quarters over the Guyana Government granting massive benefits to Exxon, which along with its co-venturers are conducting exploration and production activities in the oil-rich Stabroek Block offshore Guyana.
Since coming into office, the Dr Irfaan Ali-led People’s Progressive Party/Civic Government has enacted Guyana first local content legislation, which sets out some 40 services that oil and gas companies and their subcontractors must procure from Guyanese.
Among the provisions in the Local Content Act, which was passed in December 2021, is for Guyanese-owned companies to provide 100 per cent of ‘ground transportation and the movement of personnel.’
According to Jagdeo, some 500 locals have been hired through this provision to service the oil and gas companies.
“We put in law that they can only rent from local people,” the Vice President stressed.
He went onto assure that his government will continue to push for the best interest of the Guyanese people when engaging foreign companies. In the same breath, however, he underscored the importance of maintaining investors’ interest especially by honouring the oil contract that the previous APNU/AFC administration signed with ExxonMobil.
The 2016 deal continues to be heavily criticised for its low royalty – a meager two per cent and lack of ring-fencing provisions, among other features.
Only last month, ExxonMobil Guyana President Alistair Routledge has defended the contract, saying that any new changes could be very “destructive to investor confidence” in the Stabroek Block.
However, to protect local interests, the PPP/C Government is in the process of finalising the new Production Sharing Agreement (PSA) that will guide the terms and conditions of future oil contracts.
Under new conditions, Guyana stands to benefit from as high as US$20 million signature bonus for the deep-water blocks and US$10 million for the shallow-water blocks. Additionally, all future PSAs will also include the retention of the 50-50 profit-sharing after cost recovery; the increase of the royalty from a mere two per cent to now a 10 per cent fixed rate; the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent from 75 per cent.(G8)