ChrisRam.net

The Natural Resource Fund Debate: Getting the Law Wrong

Introduction

The exchange over Guyana’s Natural Resource Fund (NRF) involving Dr. Terrence Campbell, VP Bharrat Jagdeo and Dr. Ashni Singh has revealed troubling misunderstandings of our fiscal legal framework, not least from those who ought to know better. What began as a straightforward observation about the utility of the NRF Board and its Investment Committee has exposed fundamental questions about how the Administration interprets and implements critical legislation.

Vice President Jagdeo, rather than addressing the core issue raised by Campbell, dismissed Campbell by contrasting their backgrounds – though his portrayal of Campbell as privileged compared to his own East Coast roots backfired when Campbell reminded everyone of his Mahdia origins. Finance Minister Singh then peculiarly echoed this line about Campbell receiving a “schooling” from an honorary doctorate holder.

The constitutional and legal framework

But let us focus on the law, which both officials seem to have misread or misunderstood. The legal framework rests on three pillars:

First, contrary to the Minister’s claims, Article 216 of the Constitution does not restrict the deposit of revenues into the Consolidated Fund. In fact, it allows Parliament the flexibility to place funds into other accounts. If it did not, the Natural Resource Fund itself would be unconstitutional.

Second, the Fiscal Management and Accountability Act (FMAA) defines public money and governs its management. While it creates strict rules about handling public funds, it also does not, and lawfully cannot, prevent placing money received into special or separate funds. Again, think of the Gold Board or the Forestry Commission, both of which receive public money.

Third, and most crucially, as Campbell pointed out, section 16(2) of the NRF Act explicitly requires all withdrawals (not just emergencies, as Jagdeo falsely claimed) to be used for national development priorities and disaster-related projects. This requirement creates a clear mandate for tracking and reporting – after all, how can a Parliamentarian, let alone a citizen, verify compliance without knowing the national development priorities.

Compounding the failings  

The Hansard of the debate on the 2021 NRF Act tabled by the PPP/C to replace the Coalition’s 2019 Act of the same name adds another layer of concern. On the occasion of its debate in the National Assembly, the same Minister who attempted to disparage Campbell was the only speaker in a segment that lasted much less than an hour. Instead of putting on the national record and informing his colleagues of the virtues of its historic piece of legislation, the Minister, as has become his style, spent much of his time on political criticism rather than on substantive analysis of how the law would work. For legislation governing intergenerational wealth, this was a grave dereliction of duty and disregard of the National Assembly. The Act’s Explanatory Memorandum, which could have clarified these matters, was no better.

Until the courts definitively interpret section 16, citizens will argue endlessly about its meaning and intent. But one thing is clear: the law does not prevent the detailed tracking Campbell advocates. If anything, it requires it. The current structure allows for proper monitoring of oil revenues and NRF expenditure.

The way forward requires honest engagement with these legal provisions rather than attempts to distort and misrepresent them or dismiss those who raise valid questions. When our highest officials misread (or misrepresent) basic fiscal laws, it raises serious concerns about the governance of our oil wealth.

Conclusion

Future generations will judge us not just on how our generation spent the nation’s money but on how we built the systems to manage it. Their judgment on the PPP/C Administration will be harsh. An Administration that refused to send the Natural Resource Bill to a Select Committee, that rushed it through the Bill in minutes rather than hours, days or weeks, that puts in charge of the NRF a toothless board, that prefers to vest the regulatory oversight over the sector in one man with a predisposition to get his facts and interpretation wrong, should expect the harshest verdict from Guyanese.

As the first column for the new year, we wish all Guyanese and especially readers of this column a successful, healthy and productive 2025.

From ‘No Guyanese Could Agree’ to ‘No Interest’: President Ali’s Impossible Retraction

Introduction

“No Guyanese could agree with this.” These were the unequivocal words of then-presidential candidate Irfaan Ali in 2020, speaking about the 2016 PSA in a virtual interview on 26 February 2020. Just a reminder – that was one week before the 2020 elections. He went further: “We have to go towards re-looking at these contracts, renegotiating these contracts… we have to ensure that our country does not get the wrong end of the stick.”

Today, four years later and comfortably ensconced as President, Dr. Ali declares he has “no interest” in even writing to ExxonMobil about renegotiation. The spoken word, like an arrow loosed from its bow, cannot be recalled – yet the President attempts the impossible, a truly regrettable situation which does no justice or honour to President Ali or to the highest office in the land.

From Conviction to Capitulation

What makes the situation so striking and so stark is the about-turn by Dr. Ali on a position he shared with ALL Guyanese a few years ago. Except, of course, the perennial bogey-man PNC. Now the President and the PNC adore the same exploitative oil contract, against the rest of Guyana. The contrast between candidate Ali and President Ali could not be starker. In the interview, when asked about the Global Witness report which identified the signing away of US$55 Bn, and about revisiting oil contracts, candidate Ali declared unequivocally: “We have made it clear that we have to go towards renegotiating these contracts. Everything is on the table for review …Review and renegotiate.” 

Today, that passionate commitment has evolved into the inappropriate principle about the “sanctity of contracts” which is now opportunistically joined by concerns about investment climate. Another significant contrast was his less than respectful treatment of a female journalist at his recent press conference, in which he questioned her motives and the political connection of her publisher. Compare this with his friendly tone with a male host in the earlier interview – on the exact same renegotiation issue which he so vociferously promoted before he became President. The banal explanation of “different strokes ….” cannot apply in our country’s president’s case.

The Inapplicability of Sanctity

My Oil and Gas Columns 146 to 150 exhaustively examined the legal analysis of the “sanctity of contracts” in a Canadian case. The circumstances of that case were so different that made its application to the 2016 Agreement completely irrelevant and inapplicable. As demonstrated through the Churchill Falls case and numerous other examples, the principle of sanctity has never been an absolute bar to renegotiation, particularly when:

1. The agreement itself provides for renegotiation (Article 31.2)
2. Circumstances have fundamentally changed (reserves quadrupling from 3 to far in excess of 11.6 billion barrels)
3. The original terms were demonstrably secured under duress and unequal bargaining power
4. That the principle cannot in a thousand years trump Guyana’s Constitution.

President Ali’s sudden expression of investment climate concerns rings particularly hollow given Guyana’s transformed bargaining position. With proven reserves now exceeding an understated 11.6 billion barrels, the oil companies will not risk a government-favoured monopoly in the most successful and productive oil fields of the past fifty years. Correspondingly, the unacceptable circumstances giving rise to a questionable extension country for another four decades deserve not only a review but a Presidential Commission of Inquiry.

Constitutional Duty Abandoned

Guyana’s constitution and international law are strong on permanent sovereignty over the country’s natural resources. His sworn duty is to protect those resources as if the country’s life depended on it. Apart from the President’s general obligations of his office, he has specific constitutional duties regarding natural resources. The Constitution mandates the protection of Guyana’s patrimony and the non-exploitative use of natural resources for the benefit of all citizens. By refusing to even consider renegotiation, the President abandons these fundamental responsibilities.

His position directly violates Article 50’s identification of “the Parliament, the President and Cabinet” as supreme organs of democratic power. Through his inaction, he cedes this constitutional authority and duty to a foreign corporation with a documented history of manipulated numbers and improper conduct. This surrender of sovereignty is made more egregious because Article 31.2 of the PSA explicitly provides for renegotiation – a tool the President refuses to even consider using.

Rather than addressing the Agreement’s fundamental flaws, the President appears content with passive landlordism – letting ExxonMobil control the country’s principal sector while Guyana collects minimal royalties and meagre profits. These well-known flaws aren’t mere technical issues – they represent systematic disadvantages that will affect generations of Guyanese.

The Shareholder/Citizen Paradox

Paradoxically, the President leaves his countrywomen and men in the position that they stand to gain better and more valuable benefits as ExxonMobil shareholder than as a Guyanese citizen relying on their government to protect national resources. As a shareholder, a Guyanese will benefit from huge dividends and increased share price driven by robust and aggressive corporate governance, detailed financial reporting and management accountability. As a citizen, the same person must depend on discretionary handouts, lack of information, non-consultation and dismissal of their concerns. Now they face a President unwilling to even write a letter seeking better terms.

It is to President Ali’s discredit that he has placed Guyanese in such a perverse situation.

Conclusion

It is a sad day for Guyana when its leader has broken that bond of trust with the citizens; when its president shows that there is no obligation to act consistent with his promises; casually ignores his constitutional obligations to protect the country’s national resources; and does not treat women with the same respect he extends to men. When citizens would find better protection of their interests as shareholders in their exploiters than as citizens of their own country, we have truly reached a nadir in governance.

It is too late now for the President to change course and to regain the trust that the presidency and the country deserve.  As an accomplished academic with access to the best local and international resources that money can buy, he must know that the question is not whether we have the right to renegotiate. We clearly do. Only he knows why he has acted as he did.

However, and by whomsoever he has came to the position he did, President Ali will forever carry the heavy burden of having let down his country, the presidency and the people.

Epilogue: Lesson Learnt from Churchill, Leadership Lost, Legacy Betrayed

“African states must unite (for the continent) or sell themselves out to imperialist and colonialist exploiters for a mess of pottage…”: Kwame Nkrumah. Or as our own Cheddi Jagan told the National Assembly in 1983 in a speech following the invasion of Grenada: “Right now Washington is …hoping to get these puppets one by one to sell their souls for a mess of pottage.”

Introduction

As this column reaches its 150th instalment on this Old Year’s Night, one cannot help but imagine Forbes Burnham and Cheddi Jagan turning restlessly in their graves at Seven Ponds and Babu John. Whatever their later differences, policy pursuits, missteps and mistakes, these giants of our independence movement shared an unshakeable commitment to Guyana’s sovereignty and resource nationalism. Today’s betrayal of our oil patrimony, first by the APNU + AFC Coalition and now egregiously by the PPP/C, would have been unthinkable to them.

How far have we fallen from those days of nationalist and principled leadership? President Ali’s and Vice President Jagdeo’s transformation from fierce critics of the 2016 Agreement while in opposition to its most ardent defenders in government represents more than mere political expedience – it strikes at the heart of integrity, decency, accountability and the nation’s sovereignty that our founding leaders fought so hard to establish and preserve.

From Renegotiation to Sanctity

The same voices that denounced the 2016 Agreement now defend its every Article. The same legal minds that found constitutional heresy in the stability Article now justify the effective suspension of Parliament’s authority until 2057. Even more disturbing, they privately extend benefits to Exxon outside of the Agreement and publicly seize every opportunity to take the exploiter’s side against Guyanese and the national interest.

In its 2020 manifesto and speeches during the campaign, the PPP argued for and committed to renegotiation. President Ali and Vice President Jagdeo condemned the Agreement’s terms as unconscionable. They built expectations of better royalty rates, explicitly introducing ring-fencing provisions and removing the tax arrangements requiring Guyana to pay ExxonMobil’s taxes.

When in power, that commitment conveniently evaporated. First, President Ali and VP Jagdeo converted to a new religion – the sanctity of contract, which they embraced for nearly four years. As that faith was exposed as false religions do, they now claim that they have kept their promise and passed a new Petroleum Activities Act. Guyanese know the meaning of “renegotiate” and that the new Act does not affect pre-existing Agreements.

To EXX-ONe GUYANA

VP and oil czar Jagdeo struggles to rewrite his bold statements about renegotiation and now engages in all kinds of prevarication. When in opposition, he specifically cited the discovery of 3 billion barrels in the Stabroek Block as justification for renegotiating the 2016 Agreement. Now, with discoveries exceeding 11 billion barrels, he claims his words meant something entirely different. Guyanese may be naive and even gullible, polite and non-confrontational, but stupid. No. They know what they saw with their own eyes and heard with their own ears. They know how to distinguish equivocation and obfuscation from what they saw and heard.

By his refusal to establish an independent Petroleum Commission, the President has ceded to the Vice President exclusive and unquestioned authority over all decisions concerning the petroleum sector. In doing so, his once imaginative and insightful motto of One Guyana is fast evolving into EXX-ONe GUYANA.

From Critics to Defenders to Enablers

The pattern of betrayal goes beyond mere policy reversal. The government has become ExxonMobil’s most reliable defender, ignoring or dismissing those who dare question the company’s false accounting, made-up cost recovery claims and unsupervised operations. They resist meaningful environmental oversight and delay promised sector reforms, including establishing a Petroleum Commission, again publicly committed by Ali and Jagdeo, or holding a Commission of Inquiry into the Agreement’s negotiation despite former Minister Trotman’s willingness to testify.

Their resistance to investigation suggests they fear what might be revealed about the previous administration’s actions and perhaps their own role in maintaining these arrangements. We recall that in his book “From Destiny to Prosperity,” Raphael Trotman, then oil Minister, revealed that Jagdeo, as Leader of the Opposition, had secretly agreed with the APNU + AFC Government not to oppose the Legislative Order granting the ultra-generous tax measures in the 2016 Agreement. Now, the talkative John Hess announces that the oil companies have been assured that the “fiscal terms” in the 2016 Agreement — translated to Guyana will pay their taxes – will continue until 2057 at the very least. Who else but the top echelon of the current Administration could give such an assurance?

The Opposition

And where does the current Opposition fit into all of this? The APNU+AFC coalition’s failure to hold the government accountable compounds this betrayal of trust. Having been part of the government that signed the original agreement, it now appears paralysed by its role. Opposition Leader Aubrey Norton’s lack of knowledge and interest in this crucial issue is extremely disturbing. His failure to articulate any coherent position on renegotiation, inability to effectively challenge the government’s reversals, and apparent disinterest in the technical details of oil governance suggest a profound lack of understanding or a deliberate abdication of responsibility.

Conclusion

The surrender of parliamentary sovereignty through the stability clause until 2057 represents a constitutional crisis unprecedented in resource agreements globally. Our founding fathers fought for permanent sovereignty over our natural resources and parliamentary supremacy. Their successors have traded both for a mess of pottage.

As the final hours of 2024 tick away, we stand at a cusp. We can look back on a year and period of shameful capitulation by our political leadership, or we can look forward with hope that the Guyanese people will finally say “enough” and reclaim the patrimony that their founding fathers would have insisted upon and is guaranteed by our Constitution.

One thing for sure: The 2016 Agreement allows for renegotiation. Ali and Jagdeo, with the tacit agreement of the leading opposition, have done more than turn their backs on Guyana. They have sold the country for a mess of pottage. They want to shut down the voice of the people. They will not allow a referendum.

Elections 2025 offer the people the opportunity to respond. Will they support any political party that sells out their birthright? Or will they reject them for any party committed to RENEGOTIATION?

The year 2025 will provide the answer.

Happy New Year to all Guyanese, especially our readers.

Canadian Sanctity of Contract case offers hope for Guyana: Part 4

Introduction

Having established in the previous parts the considerable assistance that Guyana can draw from the Churchill Falls case in pursuing renegotiation of the 2016 Agreement, this part examines the specific mechanisms available under the 2016 Agreement that allow Guyana to achieve that end. Additionally, I argue that ExxonMobil’s recent categorical refusal to consider any modifications to the Agreement provides the very leverage needed to compel meaningful negotiations.

Article 31.2 of the 2016 Agreement is not a mere aspirational provision – it creates binding obligations on Guyana and the oil companies. The provision requires them to consult on modifications and amendments proposed by either. This is a positive obligation: neither party can refuse to engage in good-faith discussions on proposals by the other party. While Exxon may ultimately reject any change proposed by the Government or make its counterproposal, an outright refusal to enter negotiations represents a distinct breach. It is the same principle when Exxon seeks a force majeure or any other proposal. Guyana does not have to agree, or it may suggest an amendment to the proposal. However, it is required to consider the request in good faith since failure will trigger arbitration.

ExxonMobil’s categorical public declaration through its local President opposing any renegotiation potentially constitutes a breach of this contractual obligation. Such an unconditional refusal contradicts the fundamental purpose of Article 31.2, which contemplates periodic review and potential modification as circumstances warrant. This breach would provide grounds for Guyana to initiate arbitration proceedings.

Good Faith Obligations

The obligation for good faith engagement in contract modifications extends beyond Guyana’s Agreement. It represents a cornerstone principle of contract law, firmly established across both common law and civil law jurisdictions. This universal principle gains particular force in Guyana’s case, as amendments are explicitly enshrined within the Agreement, creating an even more compelling position than that established in the Churchill Falls case.

ExxonMobil’s unequivocal public opposition to renegotiation elevates this beyond a mere negotiation impasse to a potential contractual breach. Their blanket refusal to consider modifications, irrespective of merit or changing circumstances, contravenes the letter and intent of Article 31.2 and fundamentally undermines its core purpose as a mechanism for contractual adaptation.

This breach assumes critical significance when viewed against the Agreement’s fundamental defects previously analysed. The glaring absence of ring-fencing provisions, the unprecedented requirement for government payment of ExxonMobil’s taxes, and the extraordinary subordination of parliamentary sovereignty to an agreement secured under demonstrable and well-documented duress collectively constitute compelling grounds for pursuing modifications under Article 31.2.

These structural flaws and ExxonMobil’s categorical refusal to engage strengthen Guyana’s position in subsequent arbitration proceedings.

Legal Mechanisms Available

The Agreement’s dispute resolution provisions provide multiple avenues for addressing ExxonMobil’s refusal to engage in good faith discussions—from formal dispute notification to arbitration proceedings. However, before pursuing such measures, the government must adequately document both the grounds for seeking modifications and ExxonMobil’s refusal to engage in meaningful discussions.

The key is transforming ExxonMobil’s blanket refusal from a negotiating position into evidence of a breach. This requires careful documentation of attempts to initiate discussions and the company’s responses, creating a record demonstrating their violation of Article 31.2’s obligations.

Strategic Considerations

Enforcing Article 31.2 aims to secure meaningful improvements in the Agreement’s terms beyond winning a legal argument. The threat of legal action should serve as leverage to compel ExxonMobil to negotiate. Guyana’s position is strengthened because many proposed modifications reflect standard industry practices, such as ring-fencing provisions common in global petroleum agreements. ExxonMobil’s refusal to discuss such standard terms undermines its good faith claim.

The timing for action is optimal. With high oil prices and Guyana’s growing importance as a significant oil producer, ExxonMobil’s leverage is not absolute. While substantial, the company’s investments in Guyana make it vulnerable to reputational risks from appearing to exploit a developing nation. Commercially, Exxon cannot risk undermining the jewel in its crown as the Stabroek Block has proven to be and which now forms part of its core investment strategy.

Precedent and Practice

The international petroleum industry has numerous examples of successful contract renegotiations, often triggered by circumstances far less compelling than those facing Guyana. Indonesia’s renegotiation of its production-sharing contracts, when initial terms proved inadequate for national interests, set a defining precedent. Similar renegotiations globally – from China and Kazakhstan to Libya, Tanzania, Uganda, and Vietnam – demonstrate this is an established industry practice.

While Article 31.2 provides the legal framework, successful renegotiation requires leveraging the broader context. ExxonMobil’s mounting concerns over environmental and governance issues create pressure points that strengthen Guyana’s position. The company’s rigid stance towards Guyana contradicts its public commitments to corporate responsibility and fair dealing with developing nations.

This, however, is not a problem for Exxon alone. At home, the Ali Administration’s reluctance to invoke Article 31.2 is particularly troubling since this provision creates a permanent mechanism for seeking improvements in the national interest. The contrast between available legal tools and their non-utilisation becomes stark when viewed against the agreement’s fundamental flaws. This gulf between legal potential and government inaction demands more than just public scrutiny.

Conclusion

ExxonMobil’s categorical refusal to consider modifications could ultimately backfire. Article 31.2 creates legal obligations that cannot be dismissed by mere refusal. An adequately documented case would transform the obstacle from their intransigence to our opportunity.

Yet, despite the compelling grounds for renegotiation and precise legal mechanisms to pursue them, our government shows no interest in action. The question is stark: WHY?

Column #150, appearing on Old Year’s Day, will confront this troubling question