With general elections looming, the Keith Mitchell-led New National Party (NNP) government is intensifying efforts to strike gold with oil in local waters.
The administration which is coming to the end of its five-year term in office has taken legislation to Parliament aimed at attracting investment in exploration of oil and gas.
According to Leader of Government Business in the Lower House, Works Minister Gregory Bowen, government is seeking to provide incentives that will encourage oil rigging companies to conduct studies in Grenada’s waters.
This, he said will be made possible through the Hydro Carbon Exploration Incentives Bill 2017 which was presented last Thursday at a sitting of the House of Representatives at the Trade Centre at Morne Rouge, Grand Anse.
In his presentation to the House, Minister Bowen noted that over the years, there have been interests in exploration for oil in Grenada’s waters but no returns came to the island as a result of that.
“In Grenada we have had interest. Mr. Speaker, external companies have come into our waters, they have done seismic studies…stayed on the ship and sending out various vibrations…some come with our permissions and some come without. However, over the last six or seven years, I believe that we have been trying to track down some of these culprits to ask them to pay for doing the seismic study because it is the information that’s vital – they go off and they sell it. They enter into various arrangements too. When they come in, they give you the data and they can sell it to whosoever is interested in coming to carry out exploration” he explained.
The senior government minister did not release the names of the so-called culprits.
Government is known to have engaged a Russian group known as Global Petroleum Group (GPG) to carry out seismic surveys in Grenada’s territorial waters for oil and gas.
According to Minister Bowen, government is seeking returns through taxes from the explorations that can and would be conducted in Grenada.
He said that significant sums of money are being spent to explore in Grenada’s waters and that the State can capitalise on such an activity in the form of taxes.
He spoke of companies engaged in oil exploration work bringing in persons to do work for them and paying them large salaries.
“…The problem is Mr. Speaker, when those specialists come into the country they have to abide by the laws of the country. So you’re going to come into Grenada, you’re going to earn some monies – it is not the government that’s paying you, it’s a totally big company outside of Grenada but you’re earning the monies in Grenada so then you would have to pay tax,” he said.
The senior government minister also alluded to incentives to be given to those companies that bring in equipment for oil exploration purposes.
He said the plan is to give those companies some tax breakers to get them to remain and not look to go to other neighbouring islands that might have better incentive packages.
“What (we) are doing here Mr. Speaker in a time of low prices for Hydro Carbon Products, it is really to give the big companies their break…”, he said.
According to Minister Bowen, the bill also seeks to define the exploratory nature of the work that is being conducted by the companies in order to keep them in Grenada by giving them a certain type of tax exemption.
He said: “If after you (the company) find something and you know that there are billions of dollars worth there….you’ll be making monies, you are certain that you will be making monies and then you can decide to pay your taxes.
“The state may then decide what it will do. Will it give you a break because he (the company) will say that I can go to Trinidad just next door – what I want to do here – so then you may tell them instead of the 30% taxes on corporations, you might say for the oil and gas industry, tax is only 10% whereas in Trinidad its 15% so they may come back to us,” he added.
Minister Bowen also referred to possible tax exemption from custom duties on equipment for rigging that will be removed from the island at the end of the day.
“So you bring in the rig, you bring in all the equipment, you utilize it but you take it out…at the end of the day …. everything has to go back. Should the person pay Custom Duties? We are saying no. If you ask them to pay, they will simply go to St. Vincent, you know, or they will go to Trinidad and Tobago.
“Remember the price of Hydro Carbon products now are extremely low on the market…so they would not want to come and take a chance and spend so much monies. The proposal is to remove Custom duties on machinery and equipment, parts, remove all those things because you just come to do the test for three months and you leave – we may consume some of them but that is beside the point…”.
Minister Bowen stressed that the NNP regime is interested in giving as much incentives as possible to ensure that oil companies are encouraged to explore in Grenada’s waters.