While hundreds of Guyanese go hungry daily, Jagdeo justifies foregoing US$4B to Exxon yearly - Glenn Lall

While hundreds of Guyanese go hungry daily, Jagdeo justifies foregoing US$4B to Exxon yearly – Glenn Lall

Oct 18, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Vice President Bharrat Jagdeo’s justification for foregoing revenues that could be earned from ring-fencing future oil projects underscores his disdain for Guyanese and his policy is potentially robbing each household here of $4M annually. This is the assessment of businessman and Kaieteur News Publisher, Glenn Lall who has heavily criticised Jagdeo for his remarks.

Vice President, Bharrat Jagdeo

Businessman and Kaieteur News Publisher, Dr. Glenn Lall

Ring-fencing’ simply means that each project would pay for itself, thereby allowing for greater profits to be split when development is paid off. According to the Production Sharing Agreement (PSA), Guyana signed with ExxonMobil and its partners, Hess Corporation and CNOOC, 75 percent of the monthly revenue will be deducted to cover costs, while the remaining 25 percent will be split equally (50/50) between the parties to the contract. In this manner, a ring-fencing provision would have allowed Guyana to benefit from half of the revenue generated in a project, after the expenses are repaid. Without this provision, the oil companies are allowed to give Guyana meager profits while they take the lion’s share to develop other oil projects in the Stabroek Block.

Recognising the significance of such a major gap in the contract, Jagdeo when he was leader of the Opposition, prior to August 2020 was fuming during an interview when he addressed the former government’s incompetence for failing to ring-fence the two oil projects it had approved. “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.” A few short years later, the Vice President now believes that ring-fencing the oil projects in the Stabroek Block could possibly leave the country with nothing to gain in the future.

During a press conference last week Thursday, the VP said, “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.” The Vice President explained, “We admitted that we are foregoing revenue now in exchange for massive future income because it’s going into new projects that will increase production and so even with the same share of the 50/50 plus the two percent royalty that the future income, because of the bigger scale will be massive in Guyana’s case and we are deliberately foregoing that in this period for that purpose and then trying to grab this bone now could cause you to lose all the bones, the bigger bones too in the future.

STUNNED

However, weighing in on the issue during his Monday night radio programme, Lall said he was astonished to hear the Vice President justify “selling out this country, by not ring-fencing the oil projects.” Lall said in effect what Jagdeo has done is trying to tell the World Bank, International Monetary Fund and all the oil experts in the world that they don’t know what they are talking about.”

In three separate reports dated 2017, 2019 and 2019, the International Monetary Fund (IMF) stated: “This asymmetrical treatment of profit and cost oil will benefit the contractor at the expense of delaying government revenue.” Meanwhile, the United Nations Development Programme (UNDP), along with another international expert, Chatham House and the World Bank called on Guyana to include a ring-fencing provision for each project. Painting a more graphic picture in one his reports on Guyana was Director of Financial Analysis for the Institute for Energy Economics and Financial Analysis (IEEFA), Tom Sanzillo. IEEFA estimated that Guyana should receive upward of $6 billion annually by 2028 or sooner, however, the organization believes that due to all of the new costs, Guyana will be shortchanged until the 2030’s, if not longer.

FOREGOING US$4B ANNUALLY

In further dissecting Jagdeo’s comments, Lall averaged that Guyana was giving away US$4B presently, every year due to its failure to ring-fenced the current oil projects, while the country is saddled with an external debt of over US$3B and paying roughly US$200M interest on the debt per year. “All this is happening while half of the population goes to bed hungry every day and hundreds of schoolchildren go to school with empty lunch kits. Yet, Jagdeo is comfortable giving away US$4B a year that is supposed to be coming in our pockets beginning this year, can somebody explain this to me? Could you imagine you and your family can eat bellyful every day until you die and your parents telling you wait another couple years, plenty food will come in? Can you imagine you got a bank loan that you can clear off tomorrow morning and still got money to eat and live a good life and you saying keep the loan, pay the interest, we are going to get more money later. That is the lock, that is the stranglehold, the con that ExxonMobil has given Jagdeo to give us,” Lall told his listening audience.

He added: “How can you have a bearing mango tree and you foregoing the profits to other mango trees and say bigger profits will come in, when you don’t know if mango price is going to drop tomorrow, or if oil prices going to drop 10 years from now…? What is this man telling Guyana? You have an oil spill next year, what kind of future massive money is he talking about?”

INTEREST

Additionally, Mr. Lall said with government foregoing US billions for ExxonMobil to pump into their projects that virtually makes Guyana a shareholder and as such, it should be collecting dividends along with the 50% profit oil and 2% royalty. Mr. Lall also queried that given Guyana was foregoing revenues to help build ExxonMobil projects how come that company is still charging this country interest? “Jagdeo talking about future, larger 50% and 2% – that is what Guyana is set to get, today, tomorrow and 50 years from now. But you not collecting it, you giving them back and paying interest on it too. That is like you putting your money in the bank, the bank invests it and instead of giving you interest, the bank charging you interest. Giving away your sure billions today for uncertain pennies tomorrow.”

On this note, Lall told Guyanese not to allow Jagdeo, President Irfaan Ali and Leader of the Opposition, Aubrey Norton to continue to run roughshod over them. “They are fattening ExxonMobil and their shareholders with their bad policies and then come and selling you dreams of tomorrow, when the dream is in our hands, only to start spending.”

Lall reminded that Jagdeo was all for ring-fencing to bring billions into Guyana’s pockets right away when he was in Opposition, but today he is singing a different tune. “I want to tell you something Guyanese if we don’t get out into the streets and get in these people faces then prepare for the suffering of your children and your children’s children,” the Kaieteur News Publisher declared. He added: “how can any sane person, any right-thinking human being that has a loan at the bank that burdening his soul, draining his pocket, family starving, got money in his hand to completely reverse that situation, and live a free life, a great life, but prefers to surrender that to someone else.” Mr. Lall said with the revenues that Jagdeo is prepared to forego, each household could have been enjoying $4M every year until the oil in Liza 1 and 2 is exhausted.

SHOULD DEMIT OFFICE

Lall told his audience that he sat down in his office last week and listened to the press conference where Jagdeo made the comments and was moved to say a prayer for Guyana owing to the problems it will face if he remains at the helm of this country. “When I listened to him, matter of fact, every time he opens his mouth, he confirms he is not only destroying the lives of Guyanese, but destroying the future of our unborn, and I am also watching a man who is destroying his own self with what he is doing. This man was the youngest Finance Minister under Cheddi Jagan, this man became the youngest president in Guyana and what you are witnessing today didn’t just evolve overnight, it was what he born with, he can’t help himself, the only remedy for this country is for this man to be removed immediately, if not the doom of this country will be certain and swifter.”