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GRA, UK team to audit US$900M pre-contract costs next year
By Kiana Wilburg
Kaieteur News was able to confirm, yesterday, that the government has officially completed all the necessary paperwork for IHS Markit Limited, a London-based firm, to start the audit of the US$900M pre-contract costs Guyana is expected to pay ExxonMobil.
GRA Commissioner General, Godfrey Statia
But the entity would not be working in isolation.
Kaieteur News was informed that a team from the Guyana Revenue Authority (GRA) would be working alongside the London-based firm.
When contacted for a comment in this regard, GRA Commissioner General, Godfrey Statia, confirmed that indeed, a team from the revenue authority would receive training from IHS as it pursues the audit of the pre-contract costs.
He also confirmed that the firm’s database of benchmark prices which is used as a guide to identify inflated costs would also be shared with GRA.
“…Anything they have would be shared with us is so that we can be able to do it on our own going forward,” the Commissioner General added.
This publication understands that the IHS will begin the audit of the costs within the first two weeks of January 2020.
It was in September that this news agency reported that IHS Markit was recruited to audit billions of dollars ExxonMobil and its partners said they invested in the Stabroek Block.
In its Expression of Interest (EOI), the London-based firm stated that it has the deepest source of information, analytics and solutions for the major industries such as oil, while noting that it has provided its expertise to clients in over 165 countries for more than 50 years.
The company further stated that it understands the holistic impact of costs on upstream operations.
In terms of what it is bringing to the table for Guyana, IHS said that it has a comprehensive global database of exploration and production costs. It said that this data includes local and regional costs at the component level so as to allow for detailed comparisons.
IHS also said that it has developed proprietary software solutions and tools to gain insights into costs faced in the exploration and production sector. It said that it uses cost estimation tools such as Que$tor and Vantage paired with its rich databases to provide industry leading cost analysis.
Earlier this year as well, Petroleum Advisor to the Government, Matthew Wilks, categorically stated that if oil companies rack up costs which are exorbitant and unjustifiable, Guyana will not be paying, while noting that the power of the government is in cost recovery audits.
He had said that this is the case whether it is for the controversial US$960M pre-contract costs and any costs going forward.
US$960M PRE-CONTRACT COSTS
International lawyer, Melinda Janki, was one of the first persons to note that the country is neck-deep in US$960M worth of pre-contract costs.
During a panel discussion that was held on Guyana’s oil contract with ExxonMobil at Moray House, Janki reminded that the country has to pay US$460M in pre-contract costs. This covers the period 1999 to 2015. But there is a second lot.
Janki noted that the contract specifically states that Guyana is to pay contract costs from January 2016 to when the deal was signed on October 7, 2016.
The international lawyer had said, “The costs for the whole of 2016 were about US$583M and if you apportion it to October, you get roughly US$400M. Again, Minister of Natural Resources, Raphael Trotman has agreed for Guyana to pay this.
“As at October 7, 2016, Government’s attempt to sell our oil costs us US$960M. I have found no law which gives the Minister the authority to burden the nation with this, so it is quite possible that he acted illegally.”
(See link for more details: https://www.facebook.com/jerome.edwards.925/videos/2144978259094356/)
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