Regarding our natural resources, I believe, like all Guyanese, that we should always seek to obtain a little more directly and / or indirectly, but as well-intentioned as it is, it is inaccurate and there is a great danger to believe and worse to preach that we Guyanese are receiving crumbs from the ongoing extraction and marketing of our natural resources, gold and oil. WE ARE NOT. To judge whether we are receiving crumbs or not, we have to think about all the benefits we are receiving. They can be considered in three groups:
i) Royalty and / or profit sharing. The royalty is a percentage taken off the top, before anything else. Royalties and share of profits can be taken in kind or in cash assuming sales at prevailing world market prices (not a free sale to a family member: although there has been much argument on selling prices within a group of companies when there is no price world).
ii) Taxes – Corporate income tax; taxes on imports, purchases, sales (if applicable), etc. They may be deleted to the extent permitted by law, and as indicated in the general regime. Note that these inducements and waivers are amounts “forsaken” by the Treasury, not paid by the Treasury.
(iii) Employment and personal income tax; the organization and structure, purpose and training of the workforce employed; supporting “local content” businesses; direct and indirect development of infrastructure, etc.
In some circumstances, such as opening up new remote hinterland areas, some economists may calculate and argue that benefit (iii) is large and large enough to forgo completely or to put benefits (i) and (ii ) at the lowest legal values, so this development can occur. Also note that if the project does not continue, there are no cash benefits (i) and (ii). All the benefits are only appreciated when there is a current project – No project: no benefit. Also note that our investment scheme of incentives, waivers and pre-qualifications is based on the nature and size of the investment – the scheme is accessible to everyone, whether local Guyanese or foreigners, or foreigners of all nationalities. Some countries may find it economically and financially beneficial to subsidize a key activity to some extent: a number of Caribbean governments once provided cash assistance to hotels and airlines bringing in tourists to keep airfares low and flow. high tourist. The advantage lies in the employment and economic activity created by spending by tourists. You have to think about everything that you would not have had if there were no project, before engaging in any discussion of the crumbs. What one often overlooks when reading about 1000 ounces of gold mined and sold at US $ 1800 / oz or one million barrels of oil recovered and sold for US $ 60 / bbl is the cost of recovery. and marketing of the raw material on the world market. Those who say we get crumbs ignore these costs, believing that “our” gold, oil and other natural resources are being recovered and brought to market at negligible costs. It’s the easiest thing to forget about the costs, labor, and sacrifices involved in counting the money the other person receives.
Those of us who lived through the nationalizations of the 1970s and early 1980s (like me) know that it is a real challenge to keep costs below world market prices over which we have no influence. Indeed, most of the time we owned and ran the bauxite operations, it was more of a situation like costs $ 120, world market price $ 100. During the 1940s, 1950s and 1960s many thought that we were getting crumbs for our bauxite (and it probably was then) and it was part of the nationalization campaign, but when we owned it in the 1970s, 80s, 90s and 2000s, we were putting a lot of money out of our Trea-sury to keep operations from shutting down (in the form of grants to these communities, including myself and my family). Now let me respond directly to a question that was put to me earlier: if I (a former prime minister and minister responsible for GGMC) do not subscribe to the idea that Guyana and Guyanese are getting crumbs then shouldn’t I be showing gold and oil contracts from other jurisdictions which are worse than Aurora Gold and Exxon oil contracts.
I have no contract for a particular company in gold or oil in another country to show. But the question does not end there – governments and businesses are required to publish and make available a lot of information in different places / agencies, local and foreign, according to the law. Indeed, as far as I know, all the “secrets” that are revealed were extracted from publicly available documents. Experienced and knowledgeable people willingly make global comparisons that show that we are at least in the middle, when it comes to what our government receives directly in royalties and / or profit shares and taxes. In the case of gold, our GGDMA had obtained sponsorship around the year 2000 for one of the international financial services companies in order to compare the investment regimes in some twenty major gold producing countries. Our diet was about the most demanding (taking the most) with a 5% royalty while most were at 2.5 or 3%; and our corporate income tax was the highest. In this time of declining gold prices, our GGDMA argued for a lower royalty and we ultimately opted for a sliding scale of royalty reduction for sales prices below US $ 400 per ounce. About ten years later, when gold prices were high, our government argued for a moving part up the sliding scale and set the royalty at 8% for gold prices. gold greater than $ 1000 / oz for large scale operations. Small and medium scale operations were exempted as they received no waivers on their general purchases.
I can confidently maintain that our gold mining regime is not a regime of any government – crumbs. Regarding what we, Guyanese and Guyana, receive from our oil, I will take refuge in a number of writings in prose and poetry (appearing in all our newspapers in recent months, and presentations at Moray House) of this Guyanese emigrant living in Midland, Texas – Dr. Tulsi Dyal Singh. I will refer in particular to his article published in Stabroek News of March 2, 2021, “Guyana achieved 17.4% of oil sales in profit for 2020”. I quote from a paragraph: “To be clear, Guyana got 17.4% of sales in its profit share plus 2% of sales in its royalty revenue, for a total of 19.4%. Not bad in a generally sad year for the oil industry, especially for Guyana’s two main partners in this venture – ExxonMobil and Hess Corporation, both of which have recorded substantial losses for 2020. ”You don’t have to me take our word for it that we don’t get crumbs – go back and read the entire article and more by Dr Tulsi Dyal Singh and other commentators as well. Some contracts may have a royalty of say 15%, seven and a half times Guyana’s 2%, they have no profit sharing, so for the year in question they would have received 15% of the oil, Guyana would have received a little more – 19.4%: quite a bit, no crumbs, but we wouldn’t have complained if it was a little more. As indicated here, it is necessary to read and compare the agreements / documents in total so as not to get carried away by a comparison of only one or two sections.
I think I have justified my point that we don’t get crumbs and dribbles. Indeed, our question should not / never be whether we are getting crumbs or not, but what are the alternatives that are really available to us? What better alternatives can we make ourselves accessible and apply ourselves? In my experience, to get bogged down in arguing and complaining about whether we get any crumbs is to wallow and get lost in feelings of self-pity and victimization; it allows us to not do anything constructive while instilling destructive moods and attitudes and opening the door to recurring temper tantrums that get us nowhere. However, answering the questions of what alternatives are realistically available to us, and seeking to make better alternatives available to us, makes us frown, roll up our sleeves and take action: to advance our creativity, to put ourselves in the spotlight. challenge and develop ourselves and the country. We Guyanese are a people of less than a million people: with our history of slavery, subcontracting and colonialism, in a world of 7 billion people, we are naturally suspicious, but we have to be fair and reasonable. Our challenge is to avoid and overcome anything in our history that could restrict our participation, our survival and our success in this huge evolved world of today and tomorrow, finding strengths in our history to serve us today. hui and developing partnerships with the peoples and foreign countries of the world, for our mutual benefit.
Samuel AA Hinds
Former President and Former Prime Minister
Former Minister of Mines and Minerals