Kaieteur News – As Guyana prepares to head to arbitration over US$214 million in questionable costs flagged by British Consultancy group, IHS-Markit, some four years after the audit contract was awarded, the political Opposition has cited the need for a definitive timeline to be established for the completion of such key processes.
Leader of the Opposition, Aubrey Norton and his economic advisor and spokesperson on oil and gas matters, Elson Low yesterday warned that such a measure was particularly important as the country continues to fast track the industry.
Low in his opening statement, presented during a virtual Opposition press conference, said the People’s National Congress Reform (PNC/R) had previously called for a timeline to be set in the then Petroleum Activities Bill, which would cap the time an audit takes. These calls, according to the Opposition fell on “deaf ears”. This could be the case as the party failed to submit its concerns or comments to the government during a two-week consultation period on the new oil law.
Presently, the country’s first oil audit is now in its fourth year since it was awarded to the UK company for completion. It was reported on September 9, 2019 that the former Coalition government hired IHS-Markit to undertake the review of some US$1.6B in exploration costs racked up by ExxonMobil during the period 1999-2017. The Consultant later issued a report which indicated that some US$214 million in costs being claimed by the oil giant could be disputed by the Government of Guyana (GoG). The finalization of this process is nowhere near as yet since the dispute may require settlement through arbitration.
The failure of government to complete timely audits according to the Opposition has reduced likely economic measures that can be taken to support Guyanese across the country. Low said, “We believe that it is a good time to take stock of the extreme financial losses the PPP is exposing Guyana to by refusing to competently fulfill its audit duties. The Opposition has committed to working to ensure our people get maximum benefit from our oil sector. However, we believe that there is no point talking to oil companies to get more out of the oil industry if we lose every last additional cent due to this persistent inability and unwillingness to audit. In an agreement in which we benefit from profit oil, it is incumbent on the government to ensure that proper audits are done.”
He added, “As it stands, these audit deficiencies mean Guyana’s oil revenue is vulnerable to remaining a trickle even as the number of barrels pumped daily soars. We will not be able to deliver a better standard of living, better schools, better healthcare or even economic diversification if we are not receiving the revenues we are entitled to.”
The Economist pointed out that the US$107 million that Guyana would receive from the questionable US$214 million could easily provide low-income housing for 2,000 families, or alternatively, G$100,000 for nearly every Guyanese household. He further noted that the 13 percent in questionable costs being claimed by the operator could amount to more than US$5 billion if the trend continues across the five sanctioned Stabroek Block projects. This is well above the country’s total debt, which according to this year’s Mid-Year report is just under US$4 billion.
In arguing the need for the law to stipulate a timeframe for the completion of oil and gas audits, Low stressed that it took multiple years before the country finally heard about the findings from its first audit, even though the initial report was handed over the Guyana Revenue Authority (GRA) in March 20, 2020.
Low also flagged the manner in which the public learned of the audit findings, contending that such critical information should not make its way to Guyanese through “leaked” newspaper reporting.
“It cannot be that the only way for an audit to come to light in Guyana and to be completed is for the newspapers to leak the audit. It must be that we have a structure in place, we have a time period in mind whether that’s two years, whether that’s five years, we have a specific time period and we have a structured process,” he reasoned.
Low went on to note, “This chaotic process where it is just anybody’s guess and you only find out about things where people actually leak the information out there is not acceptable and really when we are dealing with these huge amounts, it is perfectly- I think anyone would expect that you have a structured process with a specific timeframe in mind.”
The Opposition Leader’s advisor said it is expected that disputes may arise during the audit which would require an adjustment to the established timeframe. This, he urged, must be discussed at the Parliamentary level where the public can be informed of any adjustments. He strongly argued against “an open-ended process where audits are hidden for multiple years and then when they do come out, it’s chaos and there’s a question of criminality.”
Weighing in on the matter, Opposition Leader, Aubrey Norton said Guyana should draw expertise from other oil producing nations. “This is not the first audit in the World. They have had many, there must be some idea as to how long an audit should take and you can put in law, a time that is like the average time across the globe.”
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