Ring-fencing or sword fencing

Oct 21, 2023 Editorial

Kaieteur News – Vice President Bharrat Jagdeo only changes his mind and his tune when such suit his ambitions and his purposes. He was all for ring-fencing before, and enraged at how much the Coalition APNU+AFC gave away with no ring-fencing of Guyana’s offshore oil projects. Loud was the cry of the Vice President when he was in Opposition, but today when he is in government, he reverse himself on ring-fencing, as he tries very smartly to sword fence his way with words out of the tight corner he created for himself.

“They [Coalition] came into office – three billion barrels of proven reserves and they gave up zero royalties, no taxes, no ring-fencing.” That was the old Jagdeo on fire over how the previous government sold out the Guyanese people, and he was right. But that was then, and this is now, where there is a new Jagdeo, who trots out his new position on ringfencing: “Thinking in policy making is much more complex, it’s never a linear way- oh ring-fencing can save all the money in the world; ring-fencing could lead now too to us having nothing in the future.” In Jagdeo’s new inspiration, ring-fencing of projects (the same thing over which he had taken the Coalition to task), would cost this country in the long run.

This flies in the face of what the PPPC Government, as pushed by him, is charging ahead with, through higher and higher levels of production, when oil prices are over US$80 a barrel. It was Jagdeo and the president who have repeatedly said words to the effect that Guyana has to produce more oil now, and take advantage of current circumstances still favoring fossil fuels. Given the situation, a strong argument could be made to ring-fence present oil projects, because the revenues are there to absorb legitimate expenses pertaining to those projects, as properly audited, with cleaner and better monetary benefits for Guyana. Due to prices being where they are, and ExxonMobil ramping up production with increasing regularity, ring-fencing helps to contain expenses where they belong, which is within the silo that is each project, with no expense spillover (carry forward) to future projects. No ring-fencing is an invitation for ExxonMobil to play games with billions in expenses, with much disputed, as different audits are now bringing to light.

Currently, Guyanese in the national economic basement are hurting and need relief now. The oil money is flowing in one direction only, i.e., to ExxonMobil and its people. Ordinary Guyanese outside of the PPPC Government’s favored circle haven’t had a real taste of what it is to be among the top oil producers in the world. This is as Jagdeo is today talking up the future as his overnight justification for no ring-fencing. It is a lame one, and he knows it, but still persists with what has become his world-class cunningness.

Jagdeo knows that though fossil fuels still have some life, it is under constant pressure as the energy source of choice. Jagdeo also knows that oil prices can be up and down, and that there are periods of prolonged slump, or reduced demand due to economic conditions. Jagdeo knows that new oil discoveries around the world, or a revolutionary technology that powerfully competes with fossil fuels, could change the profit projection picture for Guyana because prices could come under sustained pressure.

For all the above reasons, it makes sense for Guyana to ring-fence its oil projects, and to grab its fair and rightful share of oil proceeds. Not to ring-fence, is to be an active party to ExxonMobil enriching itself at the expense of the Guyanese people. This feeds into the demand for all oil expenses to be disclosed, so that Guyanese have the clearest idea of what they are paying for, and that it is accurate and not padded, and that it is this country’s and not from somewhere else. Ring-fencing must be accompanied by the fullest disclosure of expenses, as audit results are now teaching this country. Ring-fencing serves as a needed discipline for ExxonMobil, gives Guyanese some confidence, and puts money in their pockets now, all being equal. Being hungry and living in poverty should not wait for relief until the next decade.

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