GUYANA – As Guyanese and independent global organizations continue to call on government to implement a ring-fencing provision, to allow the country to enjoy the early proceeds from the petroleum sector, the former President and Prime Minister of Guyana, Samuel Hinds has said that the lack of this key clause works in favor of the nation. Guyana’s Ambassador to the United States in a letter to the editor Kaieteur News continued the conversation on an article that was published by the newspaper indicating that Guyana should have received US$10B (Guyanese Dollars) to date but has only received US$4.4B.

Hinds said he believes that the additional money Guyana should have received was affected by taxes and ring-fencing. After explaining that governments usually accept royalty and profit payments in the place of taxes, he shifted his attention to ring-fencing. Ring-fencing in the petroleum sector would simply require each project to pay its own development costs. Guyana did not implement such a provision, leaving Exxon to use the revenues from projects producing oil to invest in other developments. In this manner, the proceeds available as profits are significantly reduced.

Hinds is adamant that this current arrangement not only works in favor of the oil companies, but the government of Guyana as well. The former President wrote: “One should also note that the lack of ring fencing (if ring fencing was unilaterally enforceable) facilitates further rapid exploration and development of the field. Yes, it may be argued that it is like us financing further and faster exploration and development of the Stabroek block.  That benefits Exxon and benefits us too.” With oil prices likely to drop in the future as the world transitions to cleaner energy sources, Guyanese have been relentless in urging government to ring-fence the projects for Guyana to see the flow of greater deposits into the Natural Resource Fund or the oil account.

Ambassador Hinds however explained that: “As long as there is a certain level of continuing discovery and development, today’s foregone payments would in time be received by us. True, there is the issue of “delayed” payments and the time value of money. Certainly, these considerations quickly become complex and complicated – where lawyers and accountants make their money; but after all of that, a judgement has to be made on what would turn out better for us.” (Kaieteur News)

Photo: Former President, Prime Minister and Guyana’s Ambassador to the United States, Samuel Hinds. (Kaieteur News)