Prime Minister Dean Barrow remains uncommitted to reviewing the contract the Government of Belize has with Belize Natural Energy, and he told our newspaper today that he also won’t commission a special investigation into the distribution of the over $600 million garnered from the sale of Belize crude.
The call was made recently by Belizeans and foreign investors, who question specifically a set of transactions between BNE and related companies, owned by major shareholders.
On top of this, CHx (BNE’s partner), headed by Alex Cranberg, is taking the government to arbitration. While a CHx official told us last week that they were still hoping for dialogue, the Prime Minister laughed at that statement, saying that Cranberg’s company had already picked its arbitrator.
Barrow said that with Belize’s current oil prospects, he does not want to erode the confidence of those who are willing to invest in Belize’s oil industry.
As to questions raised over the less than 20% cut GOB has gotten from gross oil revenues, he told us that all the funds government has received in oil proceeds (the $120 million reported to date of $652 million worth of crude sold) have gone into the general revenue fund for “budget support.”
Barrow said that he makes the distinction between the government getting its legal take and the “internal wrangling” in BNE. (As we have recently reported, shareholders have also been raising questions over the distributions of funds, and furthermore called on the Government of Belize to step in.)
As far as he is aware, said Barrow, the Government is getting 58% take, after expenses are deducted.
When we pointed out to him that this represents a drop in GOB’s take, from a reported 65% in 2008 to 58% today (2010), Barrow claimed the 58% is fair for a frontier country, a term used to describe countries new to the oil industry.
We also pointed to the fact that the government’s overall receipts of gross oil sales is the same 23% that government received before the Income Tax rate was hiked in 2006, from the 25% rate to 40%.
Barrow responded that BNE, in its final year of exploration, has been spending a lot of money in exploring for more oil. He said that the Income Tax Department and the Petroleum Department are doing all they can “to make sure we don’t get shafted.”
Our newspaper furthermore raised concerns, held within high ranks of government, with Prime Minister Barrow, over the level of expenses deducted by BNE (nearly $400 million), which, if inflated, would logically chop GOB’s slice of the pie.
Barrow said he accepts that there is an issue over the legitimacy of some of the expenses that BNE charges, and that there is a difference as to what is allowable as expense deductions.
He did concede that the government needs to do more, but only extended that to giving the public the reassurance that the Government is in a position to scrutinize the figures comprehensively.
When asked if he will commission an investigation or special House Committee hearing on the distribution of the oil wealth, Barrow said he absolutely will not.