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PNCR maintains it will engage experts on ring-fencing only when in office – Elson Low
Kaieteur News- The People’s National Congress Reform (PNCR) has maintained that if elected to office, only then it will engage experts to assess the implementation of a ring-fencing provision as part of its planned review of the contract between ExxonMobil and the State for the prolific Stabroek Block.
PNCR Economist, Elson Low
During a press conference on Friday, PNCR’s economist Elson Low reiterated the party’s position, explaining that they believe that there are both benefits and constraints to ring-fencing.
Ring-fencing is a provision that would require each oil project to fund its own development costs before profits are distributed. Under the current Production Sharing Agreement (PSA) between Guyana and ExxonMobil’s consortium, 75% of monthly revenue is deducted to cover expenses, while the remaining 25% is split equally between the government and the oil companies. However, in the absence of ring-fencing, Exxon is allowed to use the funds generated on other projects/ developments still to come onstream.
“As we have said, we will review various aspects of the existing frameworks, including the question of ring fencing. We see benefits. We also see some constraints, and so we want to engage expertise in order to deal with this issue, which we will be doing when in office,” Low stated.
He said too, “There’s some question around oil price volatility. It would be very hypocritical of me to come here and say we will definitely ring-fence ABC without us having the appropriate expertise of an international standard.”
He outlined that Guyana’s oil industry must be governed as a world-class industry and criticized the government’s handling of the sector.
The People’s Progressive Party (PPP) government has resisted calls to introduce ring-fencing, with Vice President Bharrat Jagdeo arguing that such a policy could negatively impact future oil revenues. However, Jagdeo recently explained that the projected drop in oil prices, driven by an oversupply of crude, will prolong Guyana’s ability to repay development costs and delay the country’s increase in oil profits.
During the 2025 budget presentation, Guyana’s Minister of Finance Minister Dr. Ashni Singh disclosed that in 2025, although Guyana’s daily production is expected to climb, the country will see a decrease in earnings from the sector, as oil price is likely to come down. He explained that global oil supply is expected to surpass demand this year, leading to a 10.9% drop in prices to around US$71.9 per barrel.
For their part, the PNCR has not committed to the implementation of ring-fencing. Low was asked what immediate plans the PNCR has to ensure Guyanese see more benefits from the sector despite the projected drop in revenues this year from oil.
In his response, Low stressed that the government should act now by seeking expert guidance on the matter.
“Nothing is stopping the government from hiring expertise…What is stopping them from doing that, other than a commitment to incompetence?” Low said. He argued that the government should seek expert advice immediately to properly manage the sector rather than “just bluffing their way along.”
(PNCR maintains it will engage experts on ring-fencing only when in office – Elson Low)
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