Gov’t continues search for auditors to examine Exxon’s post-2017 expenses – Minister Bharrat

Minister of Natural Resources Vickram Bharrat said government continues its search for auditors to examine ExxonMobil’s post-2017 (2018-2020) expenses.

Minister Bharrat responded Monday, to questions posed by Opposition Member of Parliament, David Patterson, who sought answers on whether the tender evaluation for the auditors for the project was discontinued.

Minister of Natural Resources, Vickram Bharrat

“This government did not discontinue any tender process. In fact, the procurement process from advertisement to receipt of bids, to establishing a panel of evaluators, to having a review of the evaluation process is currently ongoing, ” at the 35th sitting of the National Assembly.

He continued, “…Given that this government remains committed to local content development at the national level, there is little doubt that we have the requisite baseline technical accounting skills to participate in the post-2017 cost recovery audit process.”

The minister noted further, that Guyana’s local accounting firms are yet to gain experience in conducting a petroleum cost audit – especially of this magnitude. He added that this government sees it apt to allow local firms to participate in the cost audit exercise alongside an international firm. Presently, the review is ongoing, he noted.

“Let me make this absolutely clear… the cost recovery auditing process and by extension the verification of profit share is a Government of Guyana undertaking. This is not an ExxonMobil – Esso Exploration and Production Guyana Limited (EEPGL) or any other oil company’s work.

Vice President, Dr. Bharrat Jagdeo in November last year, said government remains committed to ensuring the audit of the inflated or unreasonable costs. Government said is important for local firms to participate in the audit, in its public calls for expressions of interest.

When the PPP/C Government assumed office in 2020, it took over the shepherding of an audit of ExxonMobil’s pre-contract and other pre-2017 costs. The audit was being conducted by the UK firm, IHS Markit, which was hired by the previous administration four years after oil was first discovered offshore.

The Vice President reminded that cost recovery audits were left outstanding for years. He expressed disappointment that Guyana, under the previous administration, did not develop its capacity to conduct cost recovery audits, nor did it make haste to contract a firm to conduct those audits.

“The question that should probably be asked,” Minister Bharrat said in his response, “is why the previous administration, with all their infinite knowledge and advisors, failed to make the necessary provisions for capacity building in the government services and private sector to execute such audits. Another question that can probably be asked is why the then government, with this infinite knowledge and advisors, didn’t take any steps to commence audits of any of the other fields and it’s now left for this administration to clean up.”

In addition to setting the stage for local audit firms to benefit from involvement in cost recovery audits, the government will also build the capacity of the Guyana Revenue Authority (GRA) to conduct its own cost audits for the oil sector.

Notably, US$250,000 had been allocated in Budget 2021 to continue work on this audit. Equally important, the natural resources minister highlighted that the PPP/C Government is in its final stages of completing the first cost recovery audit of 1999 to 2017. Further, the minister indicated that work is also still ongoing on the audit of the US$460 million pre-contract costs.

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