• Glenn Lall vs State…
• says deal with Exxon is a matter of private law

By Rehana Ramsey, Kaieteur News

GEORGETOWN
EnergiesNet.com 03 11 2022

The Government of Guyana (GOG) has come out in denial of each and every claim made by Kaieteur News’s Publisher, Glenn Lall, in the case filed to challenge the discriminatory tax provisions granted in the Stabroek Block Production Sharing Agreement (PSA) for ExxonMobil and its partners.

In fact, the GOG described its deal with the oil companies as a matter of private law. The applicant’s case prepared by Attorney-at-Law, Mohamed R. Ali, came up virtually at 10:30 am on Thursday at the High Court before Justice Narweshwar Harnanan. During the proceeding, the parties involved in the case were, inter alia, briefed on how to proceed with their submissions.

Those present included Mr. Lall and his attorney, Mr. Ali, Senior Counsel Edward Luckhoo and Andrew Pollard who are representing Esso Exploration and Production Guyana Limited (EEPGL)–the Exxon subsidiary that was yesterday joined as party to the matter. Solicitor General (SG) Nigel Hawke, and Deputy SG, Deborah Kumar who were part of the panel standing in for Attorney General, Anil Nandlall, SC—the legal representative for the GOG – were also present. The State‘s team submitted an affidavit in response to Lall’s challenge to the excessive tax waivers granted to the oil companies.

In the affidavit, Gopnauth Bobby Gossai Jnr. Senior Petroleuem Coordinator at Ministry of Natural Resources, who swore to an affidavit on behalf of the government, denied, “each and every averment of fact or contention of law,” made by Mr. Lall. In his application, Mr. Lall contended, among otherthings, that many of the provisions listed under Article 15.1 of the Petroleum Agreement, dated June 27, 2016 between the GOG and the oil companies, grants exemptions to persons other than licensees, which violate the Petroleum Exploration and Production Act (PEPA), the Financial Administration (and Audit) Act, the Prevention of Discrimination Act, and the Constitution.

With respect to violations of the Petroleum Law, the publisher contended that this occurs at Article 15.1 of the oil contract which states: “…no tax, value-added tax, excise tax, duty, fee, charge or other impost shall be levied at the date hereof or from time to time thereafter on the Contractor or Affiliated Companies, in respect of income derived from Petroleum Operations or in respect of any property held, transactions undertaken or activities performed for any purpose authorised or contemplated hereunder…”

Lall therefore requested declarations from the Court that the provisions are unlawful, null and void, and of no legal effect. However in an affidavit in response to the case, Gossai Jnr., a Senior Petroleum Coordinator at Ministry of Natural Resources, defended the decision by the government to grant Exxon, its subsidiary and its partners broad tax waivers.

He said based on the advice of his attorneys there is no breach or violation of the PEPA Cap 65:04; the Financial Administration and Audit Act (formerly Cap 73:01) ; the Prevention of Discrimination Act , Cap 99:08 and the Constitution, as alleged by the applicant, [Lall].

In rebuttal of Lall’s claim, the Senior Petroleum Coordinator said that he was instructed by his lawyers that the Minister is vested with the power under Section 51 of the PEPA and the Petroleum (Exploration and Production) (Tax laws) to grant EEPGL, CNOOC Nexen Petroleum Guyana Limited, and Hess Guyana Exploration Limited concessions of tax exemptions to their licensees.

Further, in answer to Lall, Gossai said that parliament expressly made provisions for the grant of tax exemptions to persons who are non-resident in Guyana, generally under the provisions of the laws of Guyana including the Income Tax Act, Chapter 81:01.

He emphasized “…The said petroleum agreement dated the 27th of June, 2016 accords with those provisions,” Further, as it pertains to Lall’s affidavit, Gossai noted that the license under the Act is one and the same as the contractor under the petroleum agreement.

As such, he noted that the Minister has the express power by virtue of Sections 10 and 51 of the Petroleum Act to enter into the said petroleum agreement and direct by the order, which was subject to the affirmative resolution of the National Assembly, that specified Acts relating to tax, shall not apply to a person who enters into a PSA with the GOG.

Additionally, he noted that Lall has not furnished any evidence to the court to demonstrate how and in what manner articles 15.1, 15.4, 15.5 15.7, 15.9, 15.10, 15.11, 15.12 of the petroleum agreement violates the Financial Administration and Audit Act.

According to Gossai, the advice of his attorneys is that the provisions of the petroleum agreement cannot alter the laws of Guyana, separately, cumulatively or in the other manner.

Moreover, the respondent contends that “the tax exemptions were lawfully, sanctioned and duly passed by National Assembly by affirmative resolution…”

The Senior Petroleum Coordinator noted too that Lall failed or neglected to show how he has been discriminated against in accordance with the Prevention of Discrimination Act and how his rights under Article 149 of the Constitution has been infringed by the provisions of the petroleum agreement. He claimed too that the newspaper publisher misconstrued the matter as his case only addresses the issues of waiver of taxes and makes no mention of remission of taxes by the Government on behalf of licensees. “…Lall failed to show the nexus as to how Section 49 of the Petroleum Exploration and Production Act violates Section 6 of the Financial Administration and Audit Act…”he added.

The respondent held that “PEPA and the order is presumed constitutional and to displace the constitutional presumptions is a high bar and the burden of which rest on the applicant …”

Towards the end of his affidavit, Gossai asserted that based on the advice of his attorneys, he believes that the petroleum agreement between the licensees and the GOG is made in private law. In the circumstances, he asked the court not grant the declaratory orders sought by Lall and dismiss his application for lack of evidence.

Last January, Lall, in an historic move, filed a case in Guyana’s High, which challenges some of the most repressive tax provisions of the Stabroek Block PSA with ExxonMobil and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited.

The application by Lall also flagged paragraph 2 of Article 15.10 of the Agreement which states: “Notwithstanding any provision to the contrary in this Article, Affiliated Companies or Non-Resident Sub-Contractors shall not be subject to the provisions of the Income Tax Act (Cap 81:01) and Corporation Tax Act of Guyana (Cap 81:03) during the expiration period on income earned in Guyana for any given tax year if the Affiliated Company or Non-Resident Sub-Contractors has conducted business for one hundred eighty-three (183) days or less on a cumulative basis in the tax year of assessment.”

Yesterday, the matter came up for the first time before Justice Harnanan. Before the start of the matter, the Judge made disclosure that he has a sibling who works for Exxon. In the interest of fairness and justice, Harnanan gave the parties involved 10 minutes to discuss if they wanted him (Justice Harnanan) to continue with the matter or for the matter to be returned to the Chief Justice to be reassigned.

When the matter was called again, there were no objections to Justice Harnanan continuing the case and therefore the judge dealt with the application by Exxon subsidiary, EEPGL. No objections were given and therefore EEPGL was added as a respondent. Thereafter, Lall‘s attorney asked for 21 days to reply to Gossai’s affidavit. Permission was granted for the Applicant to file a reply on or before the 31st March 2022. EGGPL asked for 21 days to file their affidavit and was granted permission to file on or before the 31st March, 2022. The Applicant was granted 21 days to file a reply to EEPGl’s defense, if necessary, on or before the 21st April, 2022. The matter will continue on the 22nd April, 2022 at 1:00 PM.

kaieteurnewsonlie.com 03 11 2022