Latest update November 14th, 2024 8:42 PM
Oct 15, 2024 News
(Local consultants handed GYD$312M contract to audit Exxon’s 2021, 2022 & 2023 expenses. VHE Consulting was awarded the project on October 10).
Kaieteur News- The National Procurement and Tender Administration Board (NPTAB) office revealed that local consultants VHE Consulting (which is a registered partnership between Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc.) have been awarded the contract to conduct the third audit of ExxonMobil’s expenses for the period 2021 to 2023.
According to details recently released on NPTAB’s website, VHE Consulting was awarded the project on October 10, 2024 for the cost of $312,642,834. The audit services is a project being undertaken by the Ministry of Natural Resources who had issued a tender earlier in the year for ‘Consulting Services for Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil share for the Period 2021 to 2023’.
The project was initially opened back in March and VHE was among Grant Thorton UK LLP and PKF Barcellos Narine & Company; and M. Sukhai & Company (local) in joint venture with Info Works Solutions Ltd who had submitted bids.
According to the ministry’s tender document, the Terms of Reference (ToRs) said the successful consultant is required to conduct a pre-audit analysis; devise an effective audit plan inclusive of an appropriate methodology; execute the audit in adherence to the provisions of the Stabroek Block Petroleum Agreement and applicable local laws, regulations and procedures as well as international good practices and standards.
The scope of works also includes conducting verifications of the crude oil valuation pursuant to the provisions of the petroleum agreement for the audit period as well as verifying royalties remitted to the government for the said period.
Additionally, the selected consultant will also be required to validate the accuracy of the total government share of petroleum for the period under review, and assessing the impact of the audit on future profit oil revenues. This project marks the third such audit the Guyana Government has embarked on.
The first audit was done by a British firm, IHS Markit for the period 1999 to 2017. That audit examined expenses totalling US$1.7B. Auditors had recommended US$214M be contested by the State and while the government has accepted this recommendation, there has been no move to the next step to reclaim the cost.
Only last week, the oil giant while not budging on their position with regards to the US$214M disputed costs wants the dispute to be settled outside of arbitration. This was disclosed by the company’s Country Manager, Alistair Routledge on Wednesday at a press conference at their Duke Street head office in Kingston Georgetown. Routledge was asked by a reporter, “Could you say if ExxonMobil is proceeding to arbitration over the disputed US$214.4M in cost oil from the IHS Markit audit?” Explaining that the company is continuing to work on the audits and there are ongoing discussions between them and the Guyana Revenue Authority to facilitate the exchange of information he said that while they didn’t have “any specific news to say, I don’t have any intent to call on an arbitration, I don’t think that that’s the right way to get to resolution but at the end of the day it’s laid out in the petroleum agreement, the manner in which to approach this. Ultimately, the next step would be to involve an independent expert and if we can’t resolve that way, there is the provision for arbitration, but arbitration is generally a last resort and quite expensive process.”
At a recent press conference, Vice President Bharrat Jagdeo told the media that the Government of Guyana (GoG) will not be engaging in any settlement with ExxonMobil over the US$214M in questionable costs flagged by British auditor, IHS-Markit. Jagdeo was asked by this newspaper whether government has considered settling the dispute with the oil giant given how tedious the process has been and the fact that Guyana will be required to cover the costs of Exxon’s legal defence.
To this end, Jagdeo informed that the GoG has been guided by two sets of advisors on the matter that have both recommended that the US$214M sum be returned to the cost bank. This means that the US$214M will be split as profits, which will allow Guyana to receive US$107M while Exxon will enjoy the other US$107M. Consequently, Jagdeo asserted, “I don’t believe there is scope at this stage for settlement especially given the magnitude of reduction.” He explained, “Exxon is talking about moving from US$214M to US$3M and if we settle with that, then it’s only half of that we get and so those figures are not palatable at all.” As such, the former Head-of-Stated noted, “We may have to go to arbitration.”
Meanwhile, he told reporters that government has not done an assessment of what the arbitration process would cost. He however pointed out that he believes this is the fittest method. “Given all that has happened, I think you need an independent third party on this. If you settle on any figure, say US$214M with Exxon people will say oh you caved to Exxon, if you settle at US$3M, it is worse so a third party is needed to deal with all of these issues. We should not engage, I think, in any negotiations,” the VP said.
The second audit was done by a local group, Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc (VHE Consulting) bolstered by the international support of SGS and Martindale Consultants. That contract valued US$751,000 (GY$156 million). That audit examined expenses totalling US$7.3B covering the period 2018 to 2020.
Audits are critical to ensuring that the country was not cheated by the oil companies through the procurement of goods and services from the company’s contractors. This process is particularly important since the oil contract with Exxon provides for the operator to deduct 75% of the monthly revenues generated to clear its expenses. The remaining 25% is then shared with Guyana as profits. Without finalising the audits, Guyana would not be able to reclaim the illegal costs claimed by the oil company.
(Local consultants handed GYD$312M contract to audit Exxon’s 2021, 2022 & 2023 expenses)
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