So what does government think of all those heavy threats? Well, not very much apparently. Today we contacted Natural Resource Minister Johnny Briceno in Orange Walk, and he told us that the Trinidadian petroleum finance specialist spent two weeks inside BNE and the 40% rate of tax is not only fair, in government's opinion, it's giving Belize Natural Energy an ease.
Hon. Johnny Briceno, Minister of Natural Resources
"We have said from the beginning that we consider BNE a partner, our partner, and as such we don't want to do anything that can jeopardize their operations in Belize. I'd like to point out that in 1991 when the Petroleum Act was enacted, the tax on profits of the petroleum industry was at 45%. Presently we are only enacting a tax rate of 40%.
Of course they have their preference of 25% which they informed us and we took that into account. But after discussions we had with the financial expert, the petroleum financial expert, everybody came to the conclusion that we believe that a 40% income tax rate on profits would be equitable and fair to both sides."
Jules Vasquez,
They have indicated that they had an agreement for a 25% rate of tax and that in fact this is a variance of that agreement which is the equivalent of shifting the goalposts.
Hon. Johnny Briceno,
"Well as the Minister in charge of petroleum, I was never aware of that agreement. If that was the case, they probably should be able to produce some sort of documents, some sort of letters, where that had been given to them. So for them to come and tell us that was a previous agreement, I would question it."
Jules Vasquez,
They have also indicated if the tax is advanced, they will simply stop operations and move to another country.
Hon. Johnny Briceno,
"Again BNE is a private company that has a good opportunity here in Belize. They've already found one oil field, it may be small but it is excellent quality so that if you multiply ten million barrels that they think that the well have, by $70 per barrel you are looking at a field that is going to produce over US700 million.
And if they want to make the case that because you are raising the income tax by 15% more, that that won't make it uneconomical for them, again...that's a decision they would have to make. But we are trying to work as much as we can with BNE. We are grateful for the work that they have been doing but also we have an obligation to protect the interests of the Belizean people.
When you look at the numbers for BNE, this 40% income tax will not get us to the 50%. But this income tax was not designed for BNE. This income tax was designed for the industry."
Jules Vasquez,
Do you mean it will exceed 50%?
Hon. Johnny Briceno,
"It is going to be a little under the 50%."
Jules Vasquez,
But obviously there is a difference in the math because they are claiming this will in fact give you 63% which is untenable.
Hon. Johnny Briceno,
"Yeah I think there is a math problem."
