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Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 146 – December 17, 2024
Part 1: Canadian Sanctity of Contract case offers hope for Guyana
Introduction
Contrary to the clear wishes of the Ali Administration and its sidekick ExxonMobil, the call for the renegotiation of the 2016 Production Sharing Agreement (Exxon PSA) will not likely end soon. I would not be surprised if a cohort of youths in the year 2040 would be asking why Raphael Trotman signed such a diabolical Agreement and why Attorney General of the stature and ability possessed by the incumbent Anil Nandlall S.C. often takes Exxon’s side in any litigation involving the company. We will answer both questions later in this mini-series in which I am again making the case for renegotiation of the Agreement. I do so prompted by a letter written by Terence M. Yhip, a member of the Guyana Diaspora appearing in the 15th. December 2024 Sunday Stabroek, highlighting a compelling parallel between two agreements: Canada’s Churchill Falls hydropower contract (Churchill Falls) and the Exxon PSA.
Ironically, the only error in Mr. Yhip’s letter is his assertion that the Exxon PSA’s life cycle is twenty years and, therefore, ends in 2036. In fact, as of today, it ends in 2057 after including a ten-year exploration period, a one-year COVID-19 force majeure, and a thirty-year production period.
The two agreements, each with its own facts but subject to similar legal systems, demonstrate the long-term implications of resource contracts negotiated under imbalanced conditions. While Churchill Falls is a tale of financial inequity that emerged over decades, Guyana’s PSA presents a broader set of challenges – economic, procedural and constitutional – that were evident from the outset.
Background
The Churchill Falls agreement, signed in 1969, was transformative for the Canadian province of Newfoundland and Labrador. The province wanted to monetise its vast hydroelectric potential but lacked the financial resources and technical expertise to develop the Churchill Falls hydropower plant. Hydro-Québec offered to finance the necessary infrastructure in exchange for the right to purchase most of the electricity generated at fixed prices for 65 years. For the province, the deal brought immediate development benefits. For the company, it guaranteed a stable and affordable energy source to support Quebec’s industrial expansion.
Initially, the agreement appeared equitable. Both parties assumed risks, and Newfoundland lacked other options to unlock its hydroelectric potential. However, as global energy prices rose sharply in subsequent decades, the fixed pricing terms became increasingly unfavourable for Newfoundland. Hydro-Québec profited immensely, earning billions by reselling Churchill Falls electricity at market rates, while Newfoundland’s revenues remained tied to terms negotiated decades earlier.
By the 2010s, this disparity had become untenable for Newfoundland. The province sought renegotiation of the agreement under the principle of good faith, which requires contracting parties to act honestly and fairly toward one another. Newfoundland argued unsuccessfully that the economic inequities undermined the agreement’s spirit and intent.
The judgment
However, in 2018, the Supreme Court of Canada upheld the agreement under the doctrine of sanctity of contract, which prioritises stability over fairness.
Interestingly, while the judgment shows Chief Justice McLachlin as present, it also states -without offering any reason – that he took no part in the judgment. As we shall soon see, the ruling was not unanimous.
The court’s majority opinion emphasised:
“Good faith does not compel a party to forego advantages freely negotiated in the contract. Courts cannot rewrite contracts to address inequities that arise over time.”
Despite affirming the enforceability of contracts, the decision was not unanimous, failing to address the ethical concerns surrounding resource inequities. Justice Malcolm Rowe, a native of Newfoundland, dissenting, warned against the rigidity of this approach, arguing that
“Equity cannot be divorced from justice. A rigid application of contractual terms may serve the letter of the law, but it can erode public confidence in the fairness of resource agreements.”
The judicial loss did not deter Newfoundland, which persisted. It brought the parties together to successfully renegotiate the contract in 2024, resulting in improved revenue-sharing terms while preserving Quebec’s energy stability. This outcome demonstrated that even the most rigid agreements can be revisited through persistence and negotiation.
The Churchill Falls case also offers valuable lessons in the power dynamics of resource contracts. The court also considered the extensive negotiation between the parties, the absence of any provision for adjusting the rate for the electricity supplied, and any renegotiation clause.
Conclusion
The Churchill Falls case illustrates that a court loss is not the end of the road. Public pressure, combined with strategic persistence, can compel change even in the face of rigid legal doctrines like the sanctity of contract. Newfoundland’s eventual success in renegotiating its agreement in 2024 underscores the power of public sentiment, sustained advocacy, and strong leadership to overcome inequities.
The next column will address the Exxon 2016 Agreement drawing comparisons and differences with the Churchill Falls Agreement.
Business and Economic Commentary by Christopher Ram Part 19
December 15, 2024
The Natural Resource Fund Debate – That Demands Accountability and Civility
The public debate and exchanges surrounding the Natural Resource Fund (NRF) highlight concerns about governance and the need for principled public discourse, particularly on grave national importance. At the centre is Dr Terrence Campbell, the holder of a PhD in Business Administration and a successful entrepreneur. In a letter to the media in his capacity as a member of the Investment Committee of the Natural Resource Fund, Campbell raised issues about transparency and compliance with the NRF Act. That letter emphasised the requirements of Section 16(2), which mandates that all withdrawals must meet specific criteria: financing national development priorities and major natural disasters.
Instead of prompting constructive debate, Campbell was personally attacked by anonymous bloggers and partisans who offered little substance while serving as a prelude to Vice President Bharrat Jagdeo’s direct intervention.
Jagdeo’s Missteps
In an initial comment, Mr Jagdeo accused Campbell of racism and, more recently, dismissed Campbell’s concerns by invoking a contrast between their respective upbringings. Jagdeo portrayed himself as humbly rooted on the East Coast of Demerara, implying that Campbell was urban and privileged. Correcting the Vice President, Campbell noted that he came out of the distant community of Mahdia with all its attendant challenges.
Taken together, Jagdeo’s statements reveal a dangerously flawed interpretation of the NRF Act. He asserted that detailed expenditure tracking was only necessary for emergency withdrawals, ignoring Section 16(2)’s clear stipulation that all withdrawals must meet specified criteria and undergo oversight. Emergency spending, governed by supplementary appropriation bills, requires a separate process distinct from the scrutiny of annual budgetary allocations. Jagdeo’s conflation of national priorities with general budget items further undermined his position, raising questions about his familiarity and knowledge of the law.
Campbell’s Measured Response
Campbell’s reply demonstrated civility and focus. While acknowledging Jagdeo’s slight concession – from declaring tracking “difficult” to agreeing to track emergencies – Campbell questioned why the same standard could not extend to all NRF withdrawals. Campbell emphasised that the national budget, filled with discretionary items, is not synonymous with national development priorities. He reiterated the NRF Act’s requirement for specificity and accountability, challenging Jagdeo to provide a legal basis for his distinction.
The Governance Gap
This debate underscores a broader concern about the NRF’s governance. Campbell’s call for the NRF Board and the Public Accountability and Oversight Committee to discharge their statutory duties reflects a commitment to the rule of law. These entities must ensure that all withdrawals align with the criteria set out in Section 16(2). If the government wishes to bypass these requirements, it should approach Parliament to amend the law – not reinterpret it to suit its agenda.
Jagdeo’s familiarity with the NRF Act adds another layer to the critique. He has been successively junior Finance Minister, Finance Minister, President and Vice President since 1992. He also led the attack on the Coalition Government’s NRF. He was in the National Assembly when the Ali Administration passed its version of the NRF in a late-night session of the National Assembly. And, of course, he has access to the Hansard of that debate.
Therefore, he should fully understand the distinctions between national priorities, emergency measures, and their respective legislative processes. His current misrepresentation undermines the principles of accountability outlined in the Act and emphasised in the Explanatory Memorandum, which committed the NRF to international best practices, including transparency and public reporting.
A Lesson for Public Discourse
Campbell’s approach offers a valuable example of how national debates should be conducted. Despite personal attacks, he remained composed and focused on the law. His critics, including anonymous bloggers, should note that public discourse benefits from substance, not ad hominem attacks. Jagdeo and his defenders would also do well to emulate Campbell’s civility and clarity.
Fixing the problems
There is no question in my mind that the Vice President’s use of words like “balkanisation” and “difficulty” and his subsequent concession on national disasters makes his interpretation less flawed or less mistaken. The Ali Administration needs to step back from this grave error and restore confidence in the entire NRF framework and operation. It must ensure that all withdrawals comply with Section 16(2)’s criteria without artificial distinctions between spending categories, that the NRF Board and oversight committees be independent, and that detailed public reporting on all NRF expenditures – whether for national priorities or emergencies – must become standard.
Public discourse must also rise above personal attacks. By fostering a culture of constructive engagement, Guyana can ensure that the NRF fulfils its potential as a tool for sustainable development and intergenerational equity.
Conclusion
The NRF is a historically unique opportunity for Guyana to secure its future. Its governance must reflect the highest transparency, accountability, and legal compliance standards, consistent with the Santiago principles. Jagdeo’s flawed interpretation of the NRF Act and the uncritical defences from his supporters highlight the urgent need for a course correction.
As someone who has been engaging in public discourses for nearly forty years, I found Campbell’s intervention bringing a much-needed sense of lucidity, decency and renewal. We all need to follow his example and commit to principled debate, ensuring that the NRF serves the people – not the politics of one man.
Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 145 – December 13, 2024
Referendum Rejection Raises Questions About Government’s Commitment to Oil Contract Renegotiation
Introduction
The recent dismissal by Vice President Jagdeo of a potential referendum on the ExxonMobil contract renegotiation exposes deeper questions about the government’s true commitment to securing better terms for Guyana’s oil resources. His announcement ruling out a referendum alongside the 2025 elections – notably made without any statement from President Ali – adds another layer to the administration’s puzzling and anti-nationalist approach to contract renegotiation.
A recent survey I conducted showed that 94% of Guyanese support the renegotiation of the Stabroek Block PSA, presenting a compelling mandate for action. This overwhelming public sentiment has made the referendum question unavoidable, though it would not usually arise in relation to a matter of this nature. The call for a referendum has gained oxygen only because the Government and Jagdeo have refused to do what they promised to do and what the 2016 Agreement expressly allows. Article 32.1 of the Production Sharing Agreement explicitly provides a mechanism for changes to the Agreement. Yet, after four years in office, the government hasn’t taken even the preliminary step to initiate the process.
Constitutional and statutory disorder
The Government’s resistance to public involvement extends beyond mere inaction. Through the Vice President, the oil minister and the Attorney General, it has actively stymied citizens’ efforts to bring Exxon & Co to heel by taking the side of Exxon in any legal action against exploitation, granting Exxon every space and decision it requires and demonstrating a general failure to hold Exxon accountable. This stance starkly contrasts with Jagdeo’s pre-2020 declarations that “they sold us out to the foreigners” and his vow to renegotiate what he then termed a lopsided contract.
What makes this situation particularly troubling is that such a consequential decision about Guyana’s oil patrimony was announced not by President Ali, who holds constitutional authority over such matters, or by the Prime Minister, who is constitutionally the First Vice President, but by his Vice President. This irregular chain of command raises serious questions about who truly drives Guyana’s oil sector policy. The President’s silence while his Vice President makes pronouncements on matters of supreme national importance represents a troubling abdication of executive responsibility. The Constitution vests the President with executive authority to ensure clear, accountable leadership – not a ceremonial role.
This breakdown in proper constitutional order extends beyond the Executive. When questioned about a potential referendum, GECOM’s Chairperson Claudette Singh remarkably passed the policy question to her CEO Vishnu Persaud – a technical officer with no constitutional authority to make such determinations. That Persaud then felt empowered to declare there isn’t “the slightest indication” of the need for a referendum GECOM “should focus on” mirrors the same governance dysfunction we see with Jagdeo making pronouncements that should come from President Ali. Persaud’s subsequent claims about required legislative changes, without specifying what changes, appears coordinated with Jagdeo’s “too complex” narrative, creating artificial barriers to public participation in this crucial national decision.
The Path Forward
The power of a constitutional referendum extends far beyond mere democratic process – it represents a potent negotiating tool that the government seems determined to avoid. A clear mandate from the people would provide unprecedented moral and political authority in any renegotiation attempts and demonstrate to international observers that Guyana can make sovereign decisions about its resources. The coordinated resistance from both government and electoral officials suggests a deliberate strategy of avoiding public empowerment that could force their hand with ExxonMobil.
As Guyana races toward becoming one of the world’s most significant per-capita oil producers, the synchronised opposition to a public vote from Vice President Jagdeo and the GECOM CEO, without intervention from their constitutional superiors, exposes a systematic effort to keep decisions about Guyana’s oil wealth within a tight circle of influence. Instead of embracing overwhelming public support to strengthen Guyana’s negotiating position, the administration has retreated behind claims that a referendum would be “too complex” to handle alongside general elections – an astounding admission of incompetence now being reinforced by bureaucratic obstacles from GECOM’s CEO.
Conclusion
If Guyanese society continues to accept this erosion of proper constitutional governance without protest, we risk not just our oil wealth but the entire framework of accountable government that should protect it.
The coordinated opposition to public participation in this critical national decision reveals a deeper malaise in our governance. When technical officers like GECOM’s CEO can make policy pronouncements, when a Vice President can dismiss constitutional mechanisms without presidential authority, and when the nation’s most valuable resource remains under a contract that 94% of citizens want renegotiated – and society remains largely mute – we are witnessing more than just institutional failure. This silence in the face of constitutional disorder sets a dangerous precedent for Guyana’s democratic future.
Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 144 – November 30, 2024
Exxon and Hess Give Thanks: A Turkey Named Guyana
Thanksgiving has been silently making its presence felt in Guyana with the Black Friday sale looked forward to by shoppers spending on things they do not need because they will save on Black Friday spending. The idea is an incident of Thanksgiving – a day dedicated by Americans for gratitude and feasting, celebrating their blessings and abundance.
This column can report that the celebration took on a uniquely Guyanese flavour in Exxon and Hess’s boardrooms. At their table, the centerpiece was not just a golden turkey lathered with Guyana oil, but the entire country of Guyana, with steam rising from its golden-brown oil wealth, its aroma drawing corporate vultures and shareholders to circle the feast. It was all made more sumptuous by a phalanx of politicians, professionals, regulatory institutions, and the national cricket franchise providing the stuffing – a mix of ingredients ensuring that the carving proceeded smoothly, with no obstacle along the way.
A Feast of Broken Promises
Before the 2020 elections, Guyana’s now President and chief Vice President thundered against selling out the national patrimony to ExxonMobil, Hess, and CNOOC. They promised to renegotiate terms to ensure fairness, national benefit, and justice. But once in power, these lofty promises dissipated into silence, replaced by the chant of “sanctity of contract.” The transformation mirrors the devastating betrayal of Native Americans centuries ago: invited to share their bounty under the guise of partnership, only to watch as disease decimated their populations, settlers seized their lands, and broken treaties shattered their sovereignty. Their feast of sharing became a near-genocidal tragedy.
Today, Guyana faces its own existential threats. While the weapons are not smallpox, blankets and muskets, the environmental degradation from oil spills and gas flaring poses similar dangers to national health. The economic exploitation through a skewed contract drains the nation’s wealth as surely as land theft impoverished Native nations. Adding cruel irony to injury, Guyanese citizens now face deportation from the United States under harsh immigration policies – forced to return to a homeland whose resources are being carved up by American corporations.
Politicians as the Stuffing
As every Thanksgiving host knows, stuffing is essential to the turkey. At Exxon’s table, a blend of political, legal and regulatory actors ensured that the feast remained undisturbed, each ingredient playing its part in this corporate banquet of exploitation. Here is the bio of some of these players.
The Politicians. Guyana’s political class forms the base of bland and backboneless stuffing crumbs, lacking substance but quick to soak up corporate arguments. These include the leaders who once promised renegotiation but now serve Guyana as the turkey on a platter, parroting Exxon’s line about frightening investors and ruining Guyana’s reputation. Their evolution from defenders to enablers was the toast of the occasion.
The Attorney General – Like spicy sausage, he adds energy and legalese to the stuffing. The AG’s role goes beyond passivity to active defense. In court actions challenging the environmental and contractual terms of oil operations, he frequently appears as a disguised advocate for the oil companies, wrapping corporate interests in the language of national benefit.
The EPA is like celery without the crunchiness, stringy and hollow, having lost its voice, brains, and direction. It fails to hold Exxon accountable for environmental risks, leaving citizens to bear the dangers of oil spills, flaring, and ecological degradation. Its weakness in the face of environmental threats speaks volumes about institutional capture.
Professionals and civil society. Most are like dried cranberries, adding a sheen of professionalism, patriotism and independence while helping to draft contracts, massage numbers and engage in creative writing to perpetuate the status quo. Only a rare few – willing to risk a plate at the table – stand up for the people, offering a faint but vital glimmer of resistance.
Amazon Warriors and their supporters. At the national sports stadium, cricket fans wave at foreign cricketers wearing the Exxon shirt alongside the Golden Arrowhead – nationalism slowly drowning in a sea of corporate branding.
Guyana on the Table
The turkey itself – Guyana’s oil wealth – is as vast as it is vulnerable. With billions of barrels in recoverable reserves, the country should be poised for transformative development. Yet the contract terms leave Guyana with only a fraction of the profits while requiring the nation to reimburse the oil companies for their expenses, including taxes paid abroad.
No Thanksgiving feast is complete without a drink, and Exxon and Hess have the perfect accompaniment: Guyana’s light sweet crude. Former Minister Raphael Trotman once remarked that it is “so sweet you can almost drink it.” And drink it, Exxon and Hess do – straight from the source, savouring every drop as Guyanese have no clue of their operations and how they manage ceded sovereignty. For them, Guyana oil is not just raw crude to be refined but is the driver of profits and dividends for Americans and crumbs for Guyanese.
A New Threat to Sovereignty
Now U.S. lawyers press to practise their trade in Guyana, violating the Local Content Act and national and regional arrangements governing the training and practice of lawyers. This mirrors historical patterns of external forces seeking to dominate Guyana’s resources and institutions. Such an incursion would dilute local legal services and undermine the very laws meant to protect the country. Like the Exxon contract, this demand represents yet another attempt to erode Guyana’s sovereignty under the guise of progress and partnership.
A Call for Courage
Contracts are not sacred texts. They are tools created by humans to be revisited when they fail to serve the greater good. Guyana’s leaders must break free from serving at the Thanksgiving feast to fulfill their sacred duty as guardians of the nation’s sovereignty and resources.
To end the epicurean analogy, Guyana needs more vegetarians, unwilling to participate in Exxon’s feast. While Exxon & Co carve up Guyana’s wealth and politicians line up as ingredients, the vegetarians stand apart, untempted by this gluttonous banquet. Their conscience, like their diet, refuses to consume what is tainted by exploitation.
The proposed amendment to the Acquisition of Lands for Public Purposes Act sets a dangerous precedent and should be withdrawn
To the Editor,
The government’s proposed amendments to the Acquisition of Lands for Public Purposes Act (the Act) should cause concern among property owners, legal practitioners and citizens. While the Bill seeks to address specific issues, it fails to modernise the framework to respect the Constitution and reflect fairness, transparency, and equity.
Even though no individual property owner should be permitted to obstruct critical national development projects unreasonably, this legitimate concern must be balanced against the constitutional rights of citizens and principles of fair compensation. The solution lies not in maintaining an antiquated framework that undervalues private property rights, but in establishing a modern, equitable system that serves both public and private interests.
In my 22 March 2024 column in the Stabroek News “Time for a Fairer Compulsory Acquisition”, I advocated for positive reforms that balance development needs with property owners’ constitutional rights. This Bill represents the opposite of such reform, retaining and reinforcing outdated practices and failing to address the inherent inequities in compulsory acquisition.
The principal legislation is rooted in the misconception that “market value” without more represents fair compensation. Compulsory acquisition, by its very nature, deprives citizens of their property involuntarily. As such, compensation must reflect not just the property’s market value but the forced nature of the transaction, including the psychological pain of disposition. Fair compensation should include a premium—no less than 25% above market value – to account for this dispossession, a principle recognised in progressive jurisdictions worldwide, including India. A simple amendment to section 19 of the Act would address the problem.
In 1990, the formal role of the Chief Valuation Officer (CVO) in executing the application of the Act was officially eliminated. Yet, the Government has continued to present the CVO, cloaked with the air of officialdom, at meetings with citizens whose property it intends to acquire under the Act at deflated values. Since the CVO is a government employee, the perception of bias and impartiality is inescapable. Modern legislation across jurisdictions provides for a Board or Panel of Assessors for valuation purposes.
A caring Government would not make a 1914 legislation more oppressive and backward but would embrace reforms that ensure:
- Compensation includes a compulsory acquisition premium above market value.
- Valuations are conducted transparently and independently of State influence.
- Public confidence is restored in the fairness of the process.
- Transparency and public disclosure.
As Guyana undergoes transformative economic development, we must ensure that national progress does not come at the cost of citizens’ rights. The Bill represents a crude and cynical reaction by the executive to a ruling by a judge of the High Court against the Government in a compulsory acquisition case. If there is a measure of perverse fairness in this retrograde step, its victims will be government supporters and non-supporters.
If that is not bad enough, it appears to be an attempt by the Executive to override a first-instance court decision, bypassing the normal appellate process. More troubling still is the possibility that this legislation could be applied retroactively to matters already before the Courts. Such an approach strikes at the heart of the rule of law and the constitutional principle of separation of powers. It sets a dangerous precedent where dissatisfied with judicial decisions, the Executive might routinely resort to legislative amendments rather than pursuing proper legal appeals.
This Bill should be withdrawn forthwith.
Yours sincerely,
Christopher Ram