Oct 07, 2022 News
GUYOIL fuel scandal…
Kaieteur News – The Auditor General of Guyana has flagged the lack of a contract and price quotation in a botched fuel deal between Guyana Oil Company (GUYOIL) and an unlicensed fuel supplier.
Following allegations of corruption at the state-owned company, GUYOIL Chairman of the Board of Directors, Paul Cheong had written to the Auditor General Office in April 2021, requesting that an audit be conducted into the alleged procurement of fuel by GUYOIL from Aaron Royality Inc. (ARI).
According to the special audit findings, four GUYOIL officials had breached procurement protocols to engage with the unlicensed company for the supply of Heavy Fuel Oil (HFO) even in the absence of a contract and a price quotation.
In addition to the aforementioned, the Auditor General concluded that there seems to have been be an ad havoc procedure for inviting bids at GUYOIL, stating too that there was no competitive bidding process in selecting suppliers and that no due diligence was conducted on the firm/suppliers selected.
Notably, it was also highlighted that the negotiations between GUYOIL officials and representative of the unlicensed fuel company was conducted at a bottom flat of a rented property with no sign board displaying the name of the business.
In the Auditor General (AG) report dated May 28, 2021 it named former Director, Akanni Blair, former General Secretary (GS), Trevor Bassoo, Company Secretary (CS), Shawn Persaud and Inventory and Procurement Manager (IPM), Leonard Khan – as the officials who acted inappropriately and not in the best interest of the company.
The AG had recommended that the officials be relieved of duties and that the Guyana Police Force (GPF) should be called in to conduct an in-depth investigation and institute charges if necessary.
The fuel scandal started after GUYOIL won a bid to supply the Guyana Power and Light (GPL) with HFO. On March 16, 2021, a contract was signed between the two companies for the supply and delivery of 900,000 barrels of fuel at the total cost of US$9,945,000 (US$11.05 per barrel). However, it was stated that GUYOIL official Khan had related that due to the timeline of the delivery schedule and failed negotiations between GUYOIL and their new fuel suppliers, the company resorted to engage its fuel suppliers (Paria and Staatsolie) to deliver the HFO that was to be supplied to GPL.
Documentation confirmed that after receiving the fuel from their supplier, GUYOIL delivered two shipments of HFO to GPL between April 9 and 20, 2021.
However, even though the contract was signed for the supply and delivery of 900,000 barrels of HFO valued at US$9.9 million, GUYOIL ended up paying excess money to its two suppliers. It was revealed in the audit document that a total of 62,266 barrels of HFO, at the cost of US$4.1 million, was delivered to GPL, which was not in accordance with the contract price.
In fact, the contract that was signed between GUYOIL and GPL was for the supply of the 900,000 barrels at US$11.05 per barrel. However, the two shipments that GPL received from GUYOIL were at the cost of US$64.93 and US$68.28 per barrel – revealing that GUYOIL paid in excess of US$3,462,311($692,000,000) to their fuel suppliers.
The AG pointed out that it was the GM, CS, and IPM who negotiated the deal to supply the HFO that resulted in an excess payment of US$3,462,311 to fuel companies, Staatsolie and Paria. As such he stated the trio should be held accountable. If this deal had continued GUYOIL would have paid their suppliers Staatsolie and Paria approximately US$55 million, which is six times higher than the contract cost which was signed for US$9.9 million for the same 900,000 barrels of HFO.
On April 22, 2021, GUYOIL formally requested that GPL rescind the contract and on April 23, 2021, the contract was mutually terminated.
Notably, before the contract was officially terminated GUYOIL officials had already engaged ARI to supply and deliver fuel.
According to the audit document, it was Director Blair’s friend, Chris Spencer, who had suggested ARI to supply the HFO for the GPL contract. As such, Blair and the Company Secretary was invited to a meeting.
The initial meeting was set for April 2, 2021 (weeks before the other contract was terminated) at the Caribbean Inn which is located at Mon Repos, East Coast Demerara. The representatives of the company were unable to make it to that venue and as such the GUYOIL officials had went to the home/office of ARI representative which is located at Diamond Housing Scheme, East Bank Demerara.
On April 3, 2021, a meeting was held in GUYOIL’s Board Room located at Providence, EBD, with the Company Secretary, Director Blair, IPM Khan, and Jayson Aaron of Chief Executive Officer (CEO) of ARI.
Days later a representative of the unlicensed fuel company had emailed GM Bassoo informing him that the company was in the process of bringing the HFO to Guyana. It was also stated that the company is aware that GUYOIL had made arrangements with another supplier to bring the HFO. To this end, it was pointed out in the email that the other fuel company was supplying GUYOIL with the HFO at a higher cost than what was agreed upon between GUYOIL and ARI.
The General Manager had later emailed the Chairman and Directors that ARI representative were disappointed that GUYOIL officials had contacted them to source fuel but were refusing to receive the
HFO. As such, Aaron had issued several ultimatums to GUYOIL to conclude the transaction with him or he would expose that officials of the company had contacted him to procure the fuel and that there was some corrupt aspects to what was subsequently required of him to secure the deal.
After the GUYOIL fuel scandal came into the spotlight, Bassoo had tendered his resignation from GUYOIL in April 2021, and in the same month President Irfaan Ali had ordered that Blair and Persaud be removed from the company.
This publication had reported in April last year that the Guyana Revenue Authority (GRA) had seized a shipment of fuel at the centre of the imbroglio between ARI and GUYOIL. Earlier this year, ARI had threatened to sue GUYOIL for US$3.6 million over the botched fuel deal.
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