Since the news story broke in Ireland recently of a then secret commercial oil find at Never Delay in Belize, and since disclosures made by the Government of Belize (GOB) that the government has received a mere 18 cents on the dollar for all oil receipts since the commercial declaration at Spanish Lookout in 2005, both investors and the Opposition have reacted strongly, querying what has really been happening to the oil money.
A few investors who contacted us say they are scared to go on the record, but one man, who identified himself as George Darby, and as a Belizean and shareholder in Belize Natural Energy (BNE), has directed a public letter to Mark Espat, Deputy Party Leader of the People’s United Party (PUP), expressing his displeasure with both the Government of Belize and the company.
More specifically, the letter challenges Espat, a member of the former GOB administration that gave BNE its contract, over statements he, Espat, had made in the media last week, taking GOB to task over what Espat describes as a “scandalous” ratio of funds coming to Belizeans from what had been dubbed a national asset.
More importantly, though, Darby’s letter says that shareholders have been deprived of key information on the oil money, saying “a lot of transparency is demanded here.”
The letter also points out that, “The GOB gave an undertaking that this money was meant to be put into a Petroleum Fund for the people of Belize, and reported in a way that could be easily understood – showing where the income came from and how it was used to the benefit of the people of Belize.”
Espat said that he does not know who Darby is. But Espat did write us an e-mail in response to Darby’s letter stating his position, that, “Belizeans should receive the majority of gross revenues.”
Espat told us that his position has always been the same – during the two years that the company (BNE) operated under the PUP administration, as well as the two years for which it operated under the United Democratic Party (UDP) administration.
He added that, “any shareholder fraud perpetrated….also renders the GOB as victim.”
He says that it is time for a comprehensive accounting of Belize’s oil.
The author of the letter, said Espat, like him and a vast majority of Belizeans “…agree that something is fundamentally amiss in the petroleum industry in Belize…”
In most countries where oil is produced, the country gets a minimum of 70%, except where the oil is hard to get, he said. In Belize, that is not the case, as the oil is readily accessible, added Espat.
Amandala recalls that back in 2006, when BNE and the then Musa administration fought over the increase in income taxes from 25% to 40%, BNE indicated at a press conference on June 28 that what GOB would get, despite the tax increase, would be, not 50% as the Musa administration had claimed, but even less than 30% of the revenues—23% to be exact.
It was recently demonstrated, via official information from the Government of Belize, that the total share GOB got between 2005 and 2009 was only 18%.
One contention has been the deduction of “drilling expenses” from the revenues; taxes are charged after expenses are deducted, Espat informed.
A technical source to our newspaper suggests that unless the government imposes a tax reform or changes the Production Sharing Agreement (the contract) with BNE, not much more will change.
Another suggestion was for GOB to reduce the US$90 a barrel threshold for the windfall tax (imposed by the Barrow administration in 2008 on the oil sector).
Espat noted the paradox whereby the windfall tax has yielded zilch since its implementation, while the Government had proceeded in 2009 to impose a flat tax of $1.00 per gallon of fuel that consumers buy at the pumps. The flat tax, said Espat, nets over $30 million.
By contrast, GOB earned less than $25 million from the export of $130 million worth of oil.
BNE is allowed 100% expense deduction before production sharing with the government and before taxes, our technical source explained.