GRA painting an unrealistic picture about its ability to handle ExxonMobil – Jagdeo

Jul 21, 2017 News, http://www.kaieteurnewsonline....e-exxonmobil-jagdeo/

Commissioner-General of the Guyana Revenue Authority (GRA), Godfrey Statia confidently expressed to Kaieteur News recently that a number of mechanisms are being put in place to ensure that GRA will be more than capable to deal with US oil giant ExxonMobil. But Opposition Leader, Bharrat Jagdeo believes that this is nothing but an unrealistic picture.

The former President said that GRA does not even possess the capacity to conduct proper audits on many local businesses. That said, Jagdeo insisted that a “special” unit has to be established.

“We have to have a unit that is properly staffed with people who are experienced in the petroleum industry, with people who can say this service we are buying , we are aware that it could be competitively sourced at the same quality, but at a lower price,” Jagdeo asserted.

He added, “You think that unit at GRA can do that? No. They’re struggling to go after people to collect VAT and even complex local invoices they can’t handle. So again, it sounds good, government looks good (saying) GRA is getting ready. But I think it is pure… I don’t like saying the word nonsense, but let me say, they are not defending our best interest as a country.”

Statia had acknowledged that while GRA has encountered issues with hauling in some local tax evaders, he insists that “ExxonMobil is a different kettle of fish.” In this regard, he emphasized that ExxonMobil’s operations will see the oil and gas sector eventually running 50 percent of the economy.

Given the significant role the oil and gas sector is expected to play in the country’s economic development and wellbeing, Statia said that rigid systems are being put in place from GRA’s end. This, he said, is all to ensure that the nation is not cheated in any way of the taxes that it is entitled to.

“If you look at oil it will be 50 percent of the economy. So what we are doing is gearing up ourselves to deal with this… There are a lot of things which are being prepared and trust me; we would be able to monitor ExxonMobil.”

Statia noted that GRA is already arming itself with the requisite skills and systems that it would need for the job ahead. He declined to divulge details on the systems being put in place at this time.

Nonetheless, the Commissioner-General went on to state that GRA would be more than able to handle the influx of invoices to come from ExxonMobil. He said that those invoices would be in the electronic form and will be a direct feed into GRA’s system.

“Additionally, we have established a separate Oil and Gas department that is now being trained to oversee Exxon…So we have actually set that up.

So without a doubt, GRA will be ready and it is preparing itself. We are not sitting and waiting.”

Furthermore, the International Monetary Fund (IMF) in its 2017 review of Guyana’s economy issued cautionary words when it comes to oil and its murky nature.

IMF Directors said, “As a new oil producer starting from scratch, Guyana is in a good position to put in place a framework that limits pro-cyclical spending and attenuates the impact of oil price volatility on the budget and the economy. Other fiscal structural reforms related to public financial management, procurement, and investment are important, to ensure that the oil wealth is used efficiently.”

While the rest of the citizenry wait to hear of the details of the Government’s “comprehensive framework” for the oil sector, one can assume for the time being that the plan is one which entails the establishment of a Sovereign Wealth Fund (SWF), the strengthening of fiscal frameworks and systems at the Guyana Revenue Authority (GRA) and amendments to the relevant legislation.

Additionally, the local authorities have informed the IMF that they are working on other key elements of the fiscal regime, including drafting the Petroleum Law and establishing a Petroleum Commission. They intend to use future oil revenue to help meet key development objectives, based on a transparent and rules-based framework.

The authorities also reiterated their plans to anchor future oil wealth management in a comprehensive legal framework.

Furthermore, the International Monetary Fund was careful to stress on the importance of the Government putting in place, mechanisms to ensure the transparent spending of the oil revenue to come.