Jagdeo changes tune about ring-fencing, renegotiation – KNews Publisher says

Feb 04, 2023 News

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…‘Lion out of office turns pussycat when elected’

Kaieteur News – A passionate and almost angry Bharrat Jagdeo while functioning as Leader of the Opposition, just over three years ago, said in an interview that the then A Partnership for National Unity + Alliance For Change (APNU+AFC) Coalition government “sold” the country to “foreigners” because that administration failed to include ring-fencing to shore up profits from the 2016 Production Sharing Agreement (PSA) with American oil giant, ExxonMobil.

At that time, Jagdeo assured that when the People’s Progressive Party Civic (PPP/C) returned to office, this would be a priority when the contract is renegotiated.

“They sold us out to the foreigners. The oil companies, every time there is a find out there, our people should be sad because nothing comes our way. We are gonna renegotiate those contracts because that’s not what we had in mind,” Jagdeo said.

He added, “When we were in the early days, we were coaxing the people (ExxonMobil) to go along. They (Coalition) came into office – three billion barrels of proven reserves and they gave up zero royalties, no taxes, no ring-fencing.”

Soon after taking office in 2020, the now Vice President (VP) has not only changed his tune but also his tone when it comes to the renegotiation of the Exxon contract and securing greater benefits for Guyanese.

At a press conference held on December 10, 2022, Jagdeo was visibly annoyed when he was confronted with the question of renegotiation by the Kaieteur News Publisher and businessman, Glenn Lall.

The VP said at every press conference he is being asked the same set of questions and sought to make it clear that the Exxon deal will effectively remain the same.

To this end, Lall during his radio programme aired on the Kaieteur Radio (99.1 and 99.5 FM) on January 30, 2023 said “the lion turn into a pussycat. His actions, his words and postures today is more of a man who is pretending to be clueless, helpless, powerless and useless, when he has to deliver on his own promises.”

For those who are not familiar with the term ring-fencing, the newspaper publisher and radio host explained, “Without that rule, that provision in place to ring-fence each oil project, uncle and auntie, is like leaving your front door with the safe in your house wide open for the bandits to come and take what they want and leave the couple pieces of bruck-up jewellery and the few dollar bills for you in the safe, and Jagdeo out of all persons know that more than anybody else. You see why this ring-fencing is so very important – remember ring pon your finger and the fence you or your neighbour got up, and every time you watch the ring and the fence, remember the fence is to protect your ring from the thief man passing by.”

Lall argued that a ring-fencing provision is more important than the two percent royalty Guyana receives as well as the 50 percent profit share from the contract. The Kaieteur News Publisher said that without a ring-fencing provision in any business, as much as 99 percent of profits can be lost.

“Man uncle, which farmer you know would allow their business partner to keep on piling up bills upon bills from here, there and everywhere on your mango tree, in which you have to get half and half profit, know anyone?  In a nutshell that is what ring-fencing means or what ring-fencing is all about.  Each mango tree should bear its own expenses, that is how you will get your full half and half profits – is nah true man?   If you allow the man to keep spending all over the place and come tek it out from that one mango tree, wha gon happen to your profits?  You will end up getting nothing – that is why Guyana is getting nothing from we oil presently,” the businessman said.

Lall was keen to point out too that Guyana should be getting US-billions rather than a few hundred million USD every year from its oil resource. He noted that the first, second, third and fourth project were all approved without correcting this critical aspect of the contract.

With the fifth development awaiting approval, Lall said, “now he going to approve Liza 5 – Uaru, without asking or demanding any taxes, or a cent more on that zero percent royalty he talked about, or fix the lopsided contract, and I am betting my last dollar, he will approve that fifth project with no ring-fencing to protect us from being robbed of our rightful half and half profit share from this project.”

In the absence of this key provision in the PSA which Guyana has with ExxonMobil, the company is allowed to deduct expenses from oil projects that are yet to commence operation.

That clause – ‘ring-fencing provision’ – serves as a shield and prevents burdensome expenses from being lumped onto one project, thereby shortening profits received.

Guyana has been warned by International Energy Institutes in the past that the country may never see the promised annual revenues from its oil sector, as the “one-sided” oil contract gives ExxonMobil and its partners the benefit, leaving Guyana and its people out of their fair share of the wealth.

The contract allows Exxon to deduct 75 percent of the resources each month to cover expenses to develop oil and gas projects. The 25 percent is then shared evenly (50/50) between the government of Guyana and the oil company.

It must be noted that the expenses that are not covered in that month are taken forward to the next month for repayment or cost recovery.

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• Bharrat Jagdeo, ExxonMobil, Glenn Lall, Leader of the Opposition, People’s Progressive Party Civic

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