Sunday, October 2, 2022

Audit of Exxon’s post-2017 costs in Guyana will move forward – oil minister

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Minister of Natural Resources Vickram Bharrat has confirmed that the Government of Guyana is continuing its search for auditors to examine ExxonMobil’s 2018-2020 costs.

In his written responses to questions relating to the audit, Mr. Bharrat told the National Assembly on Monday the government has not discontinued the tender process for this project. This was a direct response to a question posed by former Minister of Public Works and now Opposition Member of Parliament David Patterson who questioned whether the procurement process had been suspended.

“This government did not discontinue any tender process. In fact, the procurement process from advertisement to receipt of bids, to establishing a panel of evaluators, to having a review of the evaluation process is currently ongoing,” the oil minister outlined at the 35th sitting of the parliament on Monday.

He went on to remind that a critical aspect of this post-2017 audit is that local accounting firms are able to conduct it. This is in keeping with the government’s commitment to local content development at the national level. It also ties into the first schedule of the recently assented Local Content Bill, which states that foreign companies, their contractors and sub-contractors must utilize 90% of local accounting services by the end of 2022.

Against this background Mr. Bharrat explained, “There is little doubt that we have the requisite baseline technical accounting skills to participate in the post-2017 cost recovery audit process. However, our local accounting firms are yet to gain experience in conducting a petroleum cost audit exercise, especially of this magnitude. Therefore, this government sees it apt to allow local firms to participate in the cost audit exercise alongside an international firm.”

This commitment to building local capacity is one that Vice President Dr. Bharrat Jagdeo has also pointed to. During one of his press engagements in November 2021, the Vice President had related that the government was seeking to assemble a group of strong local auditors to collaborate with an international firm for the audit.

“We have made it clear what our intention is, to have local people involved,” Dr. Jagdeo had said. Importantly, US$250,000 was allocated for in Budget 2021 to continue work on this post-2017 audit.

In Mr. Bharrat’s responses, he also shared that the audit of ExxonMobil’s US$460 million pre-contract costs is still ongoing.

“The Government of Guyana, when we took office, was alarmed at the limited work done in this regard by the previous administration and immediately commenced with international consultants and local agencies to have a number of shortcomings addressed. Currently, the government is working to answer every questionable detail with the operator and the auditor to ensure that all expenditures are justifiable and accounted for as per the terms of the agreement,” the minister wrote.

The Government of Guyana has come in for criticism because it has not contracted a firm yet to conduct cost-recovery audits for Exxon’s post-2017 costs. Mr. Jagdeo has assured that when it comes to Exxon’s cost recovery agreement with the government, Guyana’s interests will be protected.

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