By our math on July 14th we determined that while gob has been saying much about the proposed 50-50 sharing of oil revenues, the truth of the matter is that based on our calculations the government of Belize is deriving a 28% share in oil proceeds. That figure is 22% less than what the government has promised. Two weeks ago Minister of Natural Resources admitted to 7NEWS Director Jules Vasquez that indeed 28% is what we're getting and not 50% as what most have been led to believe. He added however that BNE is still not getting away since the numbers are still being crunched to make for a better deal for Belize.
Hon. Johnny Briceno, Minister of Natural Resources
"BNE has given us some figures but what we are doing at this time is that we are now starting to work with the Mr. Lewis, the financial auditor and Dr. Ram. We are starting to study some of these numbers that they have been presenting and we have not accepted those numbers. We have not accepted those numbers. We have not accepted those figures. We need to sit down with them and go through the figures with a fine tooth comb to ensure that whatever numbers they are giving us, are the correct ones or whether they are costs that can be accepted under the PSE agreement and under the Petroleum Act."
Jules Vasquez,
So the 28% take as calculated with the budget figures will not stand?
Hon. Johnny Briceno, Minister of Natural Resources
"I do believe that there are going to be some changes. I do believe that some of the costs that they have been doing are not accurate, at least from our point of view. So I am convinced, I feel strongly that it is going to be more than 28%. BNE being the first one, you know you usually get the better deal because there was no one here. It is for instance like in your family; being first son, you get more attention than you and is the same thing that happened with these companies. They were the first and because there was no one interested, they managed to get a good deal. They negotiated very hard and at that time, the late Miss Evadne Wade, being alone, that is what she felt that she could best negotiate for Belize. Now what we are doing with them is we're trying to ensure that we could get what is legally ours. But we have legally binding agreements with them and we need to live up to those agreements."
Jules Vasquez,
All that having been said, because they were the first and because they took the risk, it is not realistic then to expect that we can get 50% of the revenue from that operation as perhaps we can get 50% revenue from subsequent operations knowing now that there is oil in Belize.
Hon. Johnny Briceno,
"Certainly with the other companies that are coming in, we are going to be getting even more than 50%. In many instances we are going to be getting beyond more than 50%. BNE, because they were the first, because of legally binding agreements that we have with them, it is going to be difficult to get to that 50%. But the tax is not a BNE tax. It is an industry tax."
If you are wondering how we've arrived at a 28 percent take on oil revenues the formula is as follows:
- The gross for one year is 70 million
- The cost is 42.86 million and the total profit that remains is 27.1 million
- A 7.5% production share, assuming that the figure is on the gross, yields $5.2 million.
- vernment's 10% equity, assuming it has no financing cost, earns it another $2.7 million
- and the royalty of 1.5% making, again, a favorable assumption that it is on the gross, yields another $1.05 million.
- Add it all up and you get $19.87 million, which is 28% of the gross of $70 million.
