According to the latest report of Guyana’s Audit Office, GY$108 billion (approximately US$518 million) in tax concessions were granted in 2022 to support booming activities in the oil and gas industry. While this is a significant sum, the nation’s Vice President, Bharrat Jagdeo, recently explained the importance of such incentives, noting that it is a norm in the business environment to stimulate economic growth.
The chief policymaker for the oil sector explained that almost all companies in Guyana’s manufacturing, mining, tourism, agriculture, and other productive sectors of the economy enjoy fiscal concessions.
“Companies in these industries can get waivers on machinery and equipment, they get waivers on buildings, they get waivers on things that they are often bringing for their operations…so it is not exclusive to oil and gas companies,” he said.
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In the case of the ExxonMobil-led consortium in the Stabroek block, Jagdeo said the production sharing agreement for the deepwater concession allows for a range of concessions to be granted. “These are concessions for capital goods and for things related to petroleum operations,” he said, adding, “Every country in the world does it.”
While the concessions to the oil industry in 2022 may seem exorbitant on a standalone basis, Jagdeo said such tools are necessary to attract investments. He also noted that the overall investments flowing into the economy as a result of the oil sector by far outstrip the concessions
granted.
The Vice President said, “Don’t allow anyone to fool you, the total investable capital in this country is a fraction of what is spent on a single [floating production, storage and offloading vessel] and that’s the total investable capital from the public and private sector in this country…”
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Earlier this year, it was disclosed by ExxonMobil Guyana that it spent more than GY$83 billion (US$400 million) with more than 1,500 Guyanese businesses in 2022 alone. That is part of the more than GY$180 billion (US$900 million) spent with locals since the first discovery in 2015. Exxon also has five sanctioned projects in Guyana worth over US$40 billion. Guyana’s collection of royalties and profit oil are expected to grow exponentially from these developments.
The official also rejected ridiculous comparisons being made in some quarters between the concessions granted and the disposable income for public servants. He cautioned that such reasoning is not only misleading but reckless since both matters are on completely different planes.
