Hon. Mohabir Anil Nandlall SC MP
Attorney General and Minister of Legal Affairs
THE bold assertion making waves in the press that the Natural Resource Fund is overstated by several billions is one that is grounded in a shocking misunderstanding and misinterpretation of the intendment, policy and express provisions of the Natural Resource Fund Act 2021, as well as, a misconception of certain elementary principles of law. It would be a grave omission to leave such legal fallacies untraversed on the public record.
It is significant to observe, after careful reading, that the author of this assertion is not alleging any act of corruption or unlawful haemorrhaging of the petroleum revenues, although the tone in which he wrote and the sensational prominence he’s accorded, may have very well conveyed that erroneous impression to the unsuspecting reader, but then again, that may be by design.
He contends that the fund contains taxes leviable on petroleum production that should be remitted to the Guyana Revenue Authority (GRA). As an aside, even if the contention possesses a scintilla of merit, it would be of academic importance only, since whether the monies are paid to GRA as taxes or are paid into the Natural Resource Fund, they are in the State’s coffers and by operation of law will eventually be deposited into the Consolidated Fund.
On the 29th of December 2021, the Parliament of Guyana enacted the Natural Resource Fund Act 2021, Act No. 19 of 2021. The principal objectives of this legislation were made clear by the People’s Progressive Party Civic (PPP/C) several years before its enactment.
The intent was to create a special fund, embracing the Santiago Principles and Practices regarding Sovereign Wealth Funds, into which all government revenues derived from the petroleum sector would be deposited, oversighted, managed, invested, withdrawn, spent and audited. These objectives are what guided the draughtsman in crafting forty-seven provisions spanning some thirty-two pages as the Natural Resource Fund Act 2021.
The Natural Resource Fund Act defines “Petroleum Revenues” as “all Government revenues specified in section 15”. Section 15 (1) provides: “Petroleum revenues shall be directly paid into a bank account denominated in United States Dollars and held by the Bank as part of the Fund.” Section 15 (2) explains what Petroleum revenue shall include. These are royalties; government’s share of profit oil; any petroleum income tax, additional profits tax or any other future tax levied on the profits of companies or individuals undertaking production operations; any signature or other bonus related to production operations or the award of a petroleum licence; and any other current or future fiscal instrument levied solely or mainly on companies or individuals involved in production operations.
It is excruciatingly plain that Section 15 (1) and (2) authorises petroleum revenues to be paid directly into the Fund. This obviously includes whatever taxes are leviable in relation thereto. Cardinally, once deposited, the Act strictly and rigidly prescribes how monies are to be withdrawn from the Fund, by what process and for what purposes. For example, by Section 16, “all withdrawals from the Fund shall be deposited into the Consolidated Fund and shall be used only to finance – national development priorities …” and “essential projects that are directly related to ameliorating the effect of a major natural disaster.”
There is absolutely no provision in the Act which permits or authorises deduction of taxes for on behalf of the Guyana Revenue Authority. In fact, any unauthorised withdrawal from or interference with monies from the Fund constitutes an Offence, upon conviction, is liable to imprisonment and several million dollars in fine. In short, the author, out of ignorance, is encouraging the commission of criminal offences.
Section 15 (4) of the Act specifically and scrupulously exempts from “Petroleum revenues” certain types of taxes. These include value added tax collection on inputs or outputs from production operations; customs duties collected on inputs into production operations; and withholding tax on payments made to contractors by companies or individuals undertaking production operations. These are revenues that are not deposited into the Fund, and the relevant taxes therein mentioned are levied and received by GRA. In other words, the draughtsman’s mind was alive to what taxes are to be paid directly to GRA.
The author places great reliance on the infamous 2016 Petroleum Production Agreement, as that Agreement imposes upon the Minister, a number of obligations in respect of the payment of taxes to the GRA on petroleum production. Those provisions of that Agreement have obviously been overtaken by the Natural Resource Fund Act.
It is a very rudimentary principle of law that if a contract conflicts with a Statute, the Statute shall prevail. Moreover, the Natural Resource Fund Act itself has a supremacy provision. It is Section 45. It provides: “in the event of any inconsistency between the provisions of this Act and the provisions of any other law on fiscal matters and financial management, or between the provisions of the Act and the terms of a petroleum licence, the provisions of this Act shall prevail.” This section is intended to and shall override every other taxing Statute on the matter.
Additionally, when the 2016 Agreement was secretly executed, it is public knowledge that there was no fiscal framework to regulate petroleum revenues and therefore, the extant framework at the time would have applied. That regime is what is set out in the Agreement. A new one has now been created. It finds expression by legislation. It must prevail as the law of the land. No Agreement can stand in its path. If there is any conflict or inconsistency, even with existing legislation, the draughtsman has put that to rest by the crystal language of Section 45.
Hon. Mohabir Anil Nandlall SC MP
Attorney General and Minister of Legal Affairs