Gov’t must show will to implement systems for early tracking of Exxon’s costs - Jordan

Gov’t must show will to implement systems for early tracking of Exxon’s costs – Jordan

Aug 29, 2022 News

– tells administration to stop painting Guyana as powerless against oil giant

By: Kiana Wilburg

Kaieteur News – Former Finance Minister and Economist, Winston Jordan does not agree with Vice President, Dr. Bharrat Jagdeo that the country cannot do real time monitoring of bills being racked up by ExxonMobil’s affiliate and Stabroek Block operator, Esso Exploration and Production Guyana Limited (EEPGL).

Former Finance Minister, Winston Jordan

In a recent interview, Jordan recalled Jagdeo’s explanation that the 2016 Production Sharing Agreement (PSA) does not cater for a co-management arrangement hence throwing all hope for real time monitoring out the proverbial window. Jordan disagreed however as he said, “No contract has to allow or disallow real time monitoring of costs. The Government has to put in the necessary infrastructure to ensure that it can monitor those costs in real time instead of waiting until you get all the bills in lump sum. I don’t know whether he has gone to any legal personnel to determine that and he should say so if he did. “But I cannot fathom that a company is taking loans on the country’s oil and you are saying to me, you don’t need details of all this until the end of a year or until the auditing time. So I am powerless? No, I don’t accept that Guyana is powerless in that regard.”

The former minister said the authorities of the day ought to end this practice of painting the country as powerless in the face of Exxon. He said if the will exists, Guyana can have key mechanisms in place to track how the company spends and arm itself with the right experts that can ask the relevant questions to ensure costs remain economical.

Vice President, Bharrat Jagdeo

In Sunday’s publication, this newspaper also showed that the country is able to demand monthly and quarterly bills from Exxon. This is actually provided for in Section Seven of the 2016 Production Sharing Agreement. Section 7.1 states: The Contractor shall prepare with respect to each Calendar Quarter, or on a monthly basis if requested by the Minister in writing, a Statement of Expenditure and Receipts under the Agreement. The Statement will distinguish between Exploration Costs, Development Costs and Operating Costs consistent with the individual categories specified in Sections 2 and 3 herein and will separately identify major items of expenditures within these categories. The statement will show the following: (a) Actual expenditures and receipts on a monthly basis for the period in question. (b) Cumulative expenditure and receipts for the budget year in question. (c) Cumulative expenditures and receipts since the Effective Date. (d) Latest forecast of cumulative expenditures to year end. (e) Variations between budget forecast and latest forecast, with explanations thereof Subject to 7.1, the Statement of Expenditure and Receipts shall be submitted to the Minister no later than thirty (30) days after the end of such Calendar Quarter or Month as the case may be.”

Under the arrangements of the contract, the Minister also has the right to audit upon 90 days written notice, at his sole cost and expense, accounts and records of the Contractor.

The contract states that the Minister may audit, examine and verify, “at reasonable times during normal business hours but not more than once per Calendar Year, all charges and credits relating to the Contractor’s activities under the Agreement and all books of accounts, accounting entries, material records and inventories, vouchers, payrolls, invoices and any other documents, correspondence and records necessary to audit and verify the charges and credits.”

During the annual audit, the Minister has the option to review items previously subjected to audit in earlier years. However, the contract stipulates that the review shall only be carried out in conjunction with the annual audit for any given year. The PSA also states that at the conclusion of each audit, ExxonMobil and the Government shall endeavour to settle outstanding matters and a written report will be issued to the Contractor within 60 days of the conclusion of such audit.

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