Dear Editor:

The Peace of Christ!

Well, the 'pros and cons' of the development of a Bahamian LNG industry are again being discussed. Such being the case, it is not unreasonable for one, who has already had much to say about this matter to make a further contribution to the contemporary debate.

Now the position of the writer with regard to LNG, as revealed in former documents, is well known – he holds tenaciously to the thesis that a well managed LNG industry, with the appropriate safeguards, can prove to be a source of tremendous economic benefit to the people of The Bahamas, without causing damage to the ecology and "the clean, green pristine" beauty of these Islands.

It is therefore, not necessary "to go over the ground already covered" in them. Then concentration will be upon the economic aspects, especially potential revenue to the Government of the Commonwealth of The Bahamas, recruitment, training and protection of Bahamian employees.

Now in the context of the many discussions on LNG which have taken place in recent years, little or nothing 'concrete' has been stated with regard to the economic benefits. True, there have been claims that the energy companies would stand to make 'millions and millions of dollars,' with The Bahamas receiving very little in terms of revenue: But no definite figures were given only vague general statements.

It is most interesting to note, however, that Craig Butler in a recent contribution in the Press made the startling claim that it is proposed that, in addition to the small fixed annual rental, the LNG companies would pay no excise tax on the first $4.50 per unit and just 2 1/2 percent on sales of this most valuable commodity above this basic price!

If Butler is correct, then several questions of extreme importance immediately come to mind. What is the rationale behind such a proposal, which prima facie at least, appears to be most favourable to the energy companies? What criteria were taken into consideration in arriving at this formula?

Were the experts in the fields of finance and economics consulted? How does this agreement compare with those entered into with other Caribbean nations with LNG industries, such as Trinidad and Tobago, and the Dominican Republic?

These questions demand urgent and honest answers. For, the proposal as it stands appears to be most unsatisfactory in terms of potential revenue to the Government of The Bahamas. This matter certainly merits further "in depth" consideration.

Now it is well known that, when it comes to mineral resources, major economic benefit is derived not from rental (which is fixed), but by means of taxes on the sales of the product. Thus, our discussion must deal with the revenue which may be derived over the years from the export (or re-export) of LNG.

I discussed the proposal as indicated in Butler's article with a gentleman here in Freeport, who has much experience in and knowledge of the energy industries. In his opinion, the present proposal seems to be most unfair to the Bahamian people. He agreed with the concept of an "incremental increase" in the export tax on LNG. We agreed on this formula:No tax on the first $4.50 per unit; two percent on every dollar increase above this basic price.

That the suggested method would be much more advantageous to the government and by implication, the people of The Bahamas, can be most convincingly demonstrated.

Let us suppose that over the next decade, the cost of LNG escalates to $8.50 per unit. (Such a projection is not fanciful, given the rising demand for energy "in the world today."

For instance, oil, which was selling for $40 - $45 per barrel less than 10 years ago, is now nearly $80). At such a price, 10 million units would sell for $85 million. Note well, that under the terms of the present proposal, the "deep pocketed" energy companies will pay no excise tax upon the first $45 million dollars; not one red cent!

Then, they would just pay 2 percent on the remaining $50 million – only $1.25 million.

Assuming that the LNG companies were to pay $55 - $60 million for the purchase and processing of the product, they still would net fantastic profits in the range of $25 – 30 million.

Dear editor, can you imagine these rich energy companies raking in $85 million in sales, realizing huge profits in the range $25 - $30 million, and turning around and paying a measly million and a quarter dollars into the treasury of this young nation?

It would, indeed, be foolish of us were we to agree to such a proposal. Butler uses an expression, bordering on a mild expletive to describe us were we to "go ahead" and sign such an agreement.

Understandably, it is not prudent for the writer, being a theologian, to resort to such "strong language."

The formula agreed upon with the Freeport accountant would yield $5 million in revenue, four times the amount which would accrue under the present proposal.

Even that however, is a conservative figure. Butler suggested a much higher amount.

The proposals of the Freeport accountant and Butler, however, are just two ways of dealing with revenue. There are others, taking into account the idea of incremental increases, tax on profits, and/or a combination of both, which may be used in assuring that the Bahamas does receive "a fair deal" from the energy companies.

In this regard, it is utterly astounding that such a proposal should be made in the case of a nation such as ours with many people who are well qualified in the fields of accounting, banking, finance etc.

Would it not be best for the "powers that be" to appoint a panel of such experts to advise on the best method of securing revenue from "the deep pocketed" energy companies?

In this regard, brilliant accountants such as Ronald Atkinson, Clifford Culmer, Franklyn Wilson, Barry Nottage and Raymond Winder; seasoned bankers such as T. Baswell Donaldson, William Allen, Julian Francis, Alfred Stewart and James Thompson; economist Kevin Alcena; astute corporate attorneys-at-law such as Brian Moree, Michael L. Paton and Anthony Thompson, come to mind.

Turning to "the younger generation," one thinks of persons such as Gregory Bethel, Wendy Warren, Chester Cooper, and my cousin Esther Weir, all of whom are very well qualified to offer advice with regard to financial matters.

It is submitted therefore, that a panel, including experts in accounting, banking, finance and corporate law drawn from the private sector and government would be well qualified to carry out a comprehensive review of the complex finances of the energy companies, make viable economic projections "and come up with" a creative formula providing a fair revenue to government, and protection for Bahamian workers while assuring the "deep pocketed" energy companies of an attractive return to their huge investments.

With regard to the welfare of Bahamian workers, since it is evident that this is indeed "a high risk industry' then adequate provision must be made for them and their families.

To my way of thinking, these companies should be required to insure each worker for at least a million dollars, with them paying the premium.

Let us take the case of a middle-aged, middle-management employee's salary at $40,000 p.a. who is married with two children in high school. Suppose (God forbid!) he were to be killed in an industrial accident. Such coverage would provide his widow with a "lump sum" of about $200,000.00 and benefit of $40,000 p.a. for 20 years.

These funds, wisely managed would enable her to meet mortgage payments, pay the children's school fees, and contribute to a pension scheme to take care of her in old age.

It also 'goes without saying' that the companies should be required to carry out a training scheme so that Bahamians may qualify for jobs at all levels in the LNG Industry. They should also be encouraged to make every possible effort to locate and recruit Bahamians with skills in the energy industry who may be employed abroad.

The writer, for instance, has a relative who earned a degree in engineering and is employed in the petroleum industry in Texas. The LNG companies should make every effort to contact such individuals and offer them posts in their homeland.

When one considers that Durward Archer served for many years in the petroleum industry in the far East before returning home to manage the Oil Bunkerage Facility at Riding Point, it would not be surprising to discover that there are, indeed, a number of Bahamians employed in industries abroad who would be willing to return to serve at home.

Well, there can be no doubt that the economic aspects of the LNG Industry merit most careful scrutiny by the people of The Bahamas before "'we sign' on the dotted line!"

As such, this article can only be regarded as an initial 'Salvo' on this matter. It is expected that more contributions, from persons more qualified in financial matters, will be forthcoming as the debate on LNG continues.

The main concern of the writer is that the people of The Bahamas should receive maximum benefit from the development of an LNG Industry in these Islands.

I recall that my colleague in ministry, Canon John Clarke, would often exhort his congregations "Don't tip God!"

Bluntly, the clergyman was urging the members to give a Tithe (a tenth of their salary), rather than a measly five dollar note, when the collection plate came their way.

So the multi-million managing moguls of the "deep pocketed" energy companies are exhorted, "don't tip the government (i.e. the people) of The Bahamas."

And 'the people' are advised, "don't accept a tip from them either!" or, as another colleague in ministry, Bishop The Rev. Dr. Simeon Hall, would put it, "There remains much land to be possessed." (Joshua 13:1).

Mr. Editor, I have said as much as I can on this matter. I must now 'leave it up to others,' well qualified in the financial/legal disciplines, to ensure that the people of The Bahamas receive maximum economic benefit from the development of an LNG ndustry in these islands.

Yours-in-Christian-Bonds

Rev. Dr. J. Emmette Weir