Oct 12, 2019 News
While the finishing touches are still being applied to the contract, the Energy Department will sign with UK based IHS Markit Limited for the audit of ExxonMobil’s US$900M pre-contract costs, more funds have been set aside to execute rigourous audits of the cost recovery bills submitted by the American oil giant.
Confirming this recently was Energy Department Head, Dr. Mark Bynoe. The official noted that just a few clauses had to be fine-tuned for the contract to audit the pre-contract costs. “We have reached a position where we are waiting on them to sign on,” the Director stated while noting that this audit would be led by the Guyana Revenue Authority (GRA). This was agreed to since GRA has already undergone significant technical training for cost-oil auditing.
Further to this, Dr. Bynoe said that funds have been aside from a loan that was received from the World Bank so that two more audits can be executed. The funds will be used to hire outside firms which are versed in detecting inflated costs. He noted, however, that the firms selected for the job would be working alongside Guyana’s teams to ensure there is a transfer of knowledge.
Kaieteur News had also asked Dr. Bynoe to state whether he is worried about time running out for these audits since the Production Sharing Agreement (PSA) Guyana signed with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), and its two other partners, specifically states that the Minister Responsible for Petroleum has only two years in which the costs incurred by the operator can be audited. Once that time has passed, the costs reported by the trio are assumed to be correct.
It was also pointed out to Dr. Bynoe that the same PSA makes provision for the Commissioner General of the Guyana Revenue Authority (GRA) to have seven years to raise an assessment for Corporate Income Tax (CIT), after the expiration of the year of assessment.
In this regard, Dr. Bynoe emphatically states that he is not the least bit worried. He said, “We just need to provide a notice of intent to audit and that would have triggered the proprietary process. Once the audit starts, there is no end date…”
The Director also pointed out that while GRA has scope for the audit of taxes, the intention is to join forces with the foreign team being hired for the cost oil audits and do one comprehensive assessment to avoid much disruption to the operator.
Once those audits are done, Dr. Bynoe explained that the Audit Office would have a role to play in that; it would review the work done by the Energy Department. When asked to say if the reports on the cost recovery audits would be made public, the Energy Department Director said he would have to check with provisions of the contract to see if this is permissible. But from where he sits, Dr. Bynoe said he would want as much transparency as possible.
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