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Campbell -Gold mining creates more benefits for Guyanese than ExxonMobil, CGX




By Abena Rockcliffe-Campbell

Petroleumworld 02 19 2018

The contract signed by a gold mining company, Aurora Mining Inc outlined clearer and stricter direct benefits for Guyanese than the two public contracts that Guyana has with oil companies ExxonMobil and CGX.
There has been public outcry regarding the controversial Production Sharing Agreement (PSA) between Government and ExxonMobil. Also, on Saturday, the government released the contract signed with CGX which is almost identical to the ExxonMobil contract. These contracts, which were signed in 2013 and 2016 respectively, make quite inadequate provisions for local content.

They were signed after the Aurora contract which was agreed to since 2011.

The Guyana Geology and Mines Commission (GGMC) was involved in the drafting and negotiation of this agreement as it was in the oil contracts of CGX and ExxonMobil.

GGMC commissioner, Newell Dennison is refusing to provide answers on how the Commission failed to secure the same or better provisions.

Local content refers to degree to which the natives of a particular country can benefit from foreign investment. This is especially in relation to the investments that feed off of the natural resources of a country.

The Aurora contract, seen by this newspaper, ensures the use of materials sourced in Guyana and, among other things, ensures local labour.

The contract states, “the Company shall use all reasonable efforts to give preference, to the maximum extent compatible with efficient operations and good mining practices using standards applicable in the international mining industry, to products and services produced and offered in Guyana, provided these are offered at competitive terms and conditions.”

Noteworthy is the fact that the term, “to the maximum extent possible” was included in the 1999 agreement that Guyana had with ExxonMobil. This was subsequently removed from the 2016 agreement.

The Aurora contract states, “Without prejudice to the rights granted to the Company under articles 8, 9 and 10 hereof, the Company shall give preference to Guyanese construction enterprises and to the use of buildings which can be constructed by using materials and skills available in Guyana, to the employment of Guyanese subcontractors for road construction and transportation and to the purchase of household products and furniture in Guyana. The Company shall also require its contractors and their subcontractors to follow these policies.”

Also, within 90 days after the end of each fiscal year of operations, “the Company shall, in the manner described in clause 3.3.1 hereof, submit a report to the Government setting forth (i) the relative percentages of foreign-sourced and Guyanese-sourced goods and services used by the Company, (ii) measures taken to enhance the role of Guyanese-sourced goods and services in the Project and (iii), measures to be implemented so as to improve such performance.”

Further, the contract states, “The report will show the performance of the Company in connection with its contribution to the economic development of Guyana over the years. The Company shall constantly use all reasonable efforts to improve such performance.”

Attorney at Law and Chartered Accountant, Christopher Ram has decried the weaknesses of the local content provisions outlined in Article 18 of the ExxonMobil PSA.

He said that the words “maximum extent possible” have, rather unfortunately, been deleted while instead of encourage, the Contractor is required to “contractually obligate” sub-Contractors to hire appropriately qualified Guyanese.

Ram opined that in what appears to be a cut and paste job, the Minister and the Contractor will meet and consider the effectiveness of their plan, while the Contractor is required to submit half-yearly reports on how their plans are working out.


Story by Abena Rockcliffe-Campbell from Kaieter News
02 19 2018

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