Ring-fencing

Apr 09, 2022 Editorial

Kaieteur News – “Without ring-fencing provisions, Guyana will be shortchanged on every oil discovery -Financial Analyst” (KN April 5). We keep hearing about this “ring-fencing”, how much Guyana needs it, and how much we must fight to get it, as one of our top demands tirelessly tabled before Exxon. What is this ring-fencing, and why is it so significant? What does it mean to have it and what would it mean not to have it, to continue merrily along without it? We will attempt to reduce this to its simplest form, through using a handful of everyday examples, which should be familiar to Guyanese.
Ring-fencing is as it sounds, and it appears. It is a circle, like a wedding ring, that binds people and things and practices and expectations within that agreed upon, committed to, space that we can measure between our thumb and any finger. Like a fence (or a ring), there is containment, and there is the understanding, the hope, the insistence, that there is no straying beyond its boundaries, there is staying within bounds. Ring-fencing is a silo into which what belongs is packed, but only what belongs; there is frowning, severe disagreements, over any thinking of mingling elements that should not be there. And to emphasise ring-fencing, we use a medical situation though it may not be the best, that of a raging diabetic. To prevent the spread of poisoned negatives, of tainted red (think income and expense statements), there is amputating of a toe, or a limb, when necessary, to protect the rest of what is a healthy body.
What is applicable, and all too relevant, in real life for individuals, also has the fullest application and relevance to business, and how corporate practices and standards ought to be. Expenses for one project must be isolated and accounted for against that project, and that one alone. Expenses must not be given carte blanche to roam freely to wherever (other projects) and whenever it pleases those charging such expenses (when nimble accounting tricks are being used as camouflage) to mislead others by manipulating numbers of immense proportions and consequences.
This is what Exxon is doing, when it takes the fullest of unfair advantage to utilize the lack of ring-fencing in Guyana’s oil contract to boost its bottom line and delight its investors. This is what started out, most abominably, with the previous APNU Coalition Government, and now continues with uninterrupted stride under this PPPC Government. It is the loophole of loopholes, and our alternately wise and wretched political leaders in today’s PPPC Government (and the Opposition) know this, but are determined to do nothing about, from every indication, so far.
We say that our national political leaders are wise and wretched at the same time. We did so purposefully, because we think that a survey of local circumstances confirms this condition of our leaders. They have the intellect, the total awareness, of what is lacking, what needs to be done, and how to go about closing this gaping ring-fencing loophole, but they are wretched by their inactions. Those denounce them for the waste of time they are, for the squandering of beliefs vested in them, for the complete paralysis that characterizes their sloth, their stubbornness, their stupidity, with not laying it all the line for removal of ring-fencing provisions (among other things) from our oil contract.
The absence of sturdy ring-fencing provisions is a perversity that must be corrected, and yesterday. The continuing of this country without it opens the door for Exxon to bulk-up its expenses by the billions and then cunningly spread them from one project to another. Exxon has not dealt fairly with Guyana, it has cheated us, as was pointed out in the US$460M pre-contract expenses submitted by the company. And all Guyanese can be assured that as the billions of expenses coming rolling in (US$10B already before us), there is great room for Exxon’s accountants and top corporate chiefs to gouge us some more, much more.
Guyanese know that if they have a criminal neighbour, then they need the best fence possible. Exxon is not a good neighbour; it is the worst of roguish partners. We need robust ring-fencing, and we must have it.

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Ring-fencing

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Ring-fencing

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