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Failure to start audit leaves Guyana forced to accept ExxonMobil’s 2015- 2018 local content costs as correct
By Kiana Wilburg
ExxonMobil Guyana President, Alistair Routledge.
Kaieteur News – According to the Production Sharing Agreement (PSA) Guyana signed with ExxonMobil in 2016, the Minister responsible for the oil sector has only two years to audit the expenses the US super major incurs at the end of each fiscal year. In other words, the Minister only has up to 2017 to audit the company’s expenses incurred in 2015. The official would also have to foot the bill for all costs associated with that audit.
Apart from the relatively short deadline to conduct this assessment, the International Monetary Fund (IMF) has highlighted the need for Guyana to complete these audits in a timely manner since its failure to do so would leave the country forced to accept the company’s costs as reported.
The IMF pointed out too that the only other auditing power Guyana has rests with the Guyana Revenue Authority (GRA). In this regard, the tax body is only empowered to raise an assessment for Corporate Income Tax (CIT) (which is paid out of the government share of profit oil), or additional tax, within seven years after the expiration of the year of assessment.
In light of the fact that Guyana has failed to establish a Local Content Committee to review costs incurred by Exxon, it would have to accept as correct, whatever expenses the company incurred for the years, 2015 to 2018. ExxonMobil had said that it spent US$1.7M in 2015, US$11.5M in 2016, US$23.8M in 2017, and US$58M in 2018. In total, this would be US$95M or $20B.
Since ExxonMobil began operations in 2015, the company has kept away from scrutiny, its local content reports, which would expose just how seriously it takes capacity building.
As for the local businesses, which it has used for the first half of the year, ExxonMobil said more than 600 Guyanese suppliers were used for services.
These “services” included the procurement of “food stuff” and “engineering” works. Again, the company provided no breakdown of the names of companies it used for the first half of 2020. The only time ExxonMobil ever released the list of companies it claimed to have used for its local content efforts was back in June 2018.
The company had claimed that it had used over 300 Guyanese registered companies to supply services.
In response to calls for evidence of same, a list was provided. Upon examination, however, it was found that ExxonMobil padded its list with the names of places like Bourda Market, Haags Bosch Dumpsite, Royal Castle, Bounty Supermarket, Metro Office and Computer Supplies, Star Party Rentals, and Shanta’s Roti Shop. It listed utility companies such as the Guyana Power and Light and the Guyana Revenue Authority as part of its local content efforts too.
Persons were also listed as registered companies. They included: Sonia Noel, Chontelle Sewett, Andron Alphonso and Mokesh Daby.
As part of one of its statements earlier this year, ExxonMobil had claimed that the Centre for Local Business Development, which is located on South Road, has remained supportive of local businesses with a transition to virtual courses.
However, no evidence or report of any kind was provided to confirm this. Additionally, ExxonMobil said that the centre continued mentorship of 10 Guyanese companies in the process to be compliant in the ISO 9001 quality management system. Those names were not released.
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