48 companies in gold, diamond, bauxite, timber, oil industries, etc. refuse to give out tax, financial data

Apr 01, 2021 News

Guyana’s second EITI report reveals…

– Country’s export, production stats. in disarray
– Govt. agencies fail to submit requested details

By Kiana Wilburg

Chart taken from the EITI 2018 Report shows a mismatch in export data held by Guyana Gold Board and the Guyana Revenue Authority.

Kaieteur News – When countries sign up to be members of the Extractive Industries Transparency Initiative (EITI), they agree to follow a set of international standards which seek to ensure all financial transactions between governments and companies in the forestry, fisheries, mining, and oil and gas sectors are in the open. This way, citizens have a clear idea of how much money should be in the national purse and can therefore question how it is being spent to improve their livelihoods.
When Guyana joined this good governance club in 2017, it was the hope of many that the foregoing would be achieved. But for the last three years, local authorities have started to understand just how difficult it is to remove the extractive sector from the cloak of darkness and into the light of transparency.
For the second time, Guyana has failed in its attempt at producing a report which accurately captures the transactions between State and companies. According to the 2018 report, which is on the website of the local EITI chapter, the extractives industries pumped $27.6B into the economy in 2018. But 39 percent of that could not be verified. The report, totalling 178 pages, notes that there are three reasons for this. The first is that companies operating in the sector have refused to give up details on their payments to the State; the second is that government agencies such as the Guyana Revenue Authority (GRA) are prohibited by law from giving out tax data without written waivers. The third reason is that the country’s export and production data is in total disarray.
According to the report, auditors were unable to reconcile discrepancies totalling close to $7B. The document said, “This un-reconciled difference relates mainly to GRA that was unable to submit its reporting templates for forty-eight (48) extractive entities because of the lack of signed waivers.” In light of this, the report noted that GRA’s total receipts from the mining, oil and gas sector could not be estimated.
It was highlighted as well that the National Insurance Scheme and the Ministry of Finance did not submit reporting templates for more than 40 companies.
Along with the fact that these government agencies were unable to provide the information requested by GY-EITI, it was noted that 41 extractive entities out of the 59 selected for review did not submit their reporting templates.
“Given the lack of reporting templates from both Government Agencies and extractive entities as set out in Section 1.4 of this report, it was not possible to ensure the comprehensiveness of the revenues collected from the extractive entities retained in the reconciliation scope,” the document outlined.
In the longer term, the 2018 report said that a review of the mining regulations should be carried out to include provisions with regards to EITI reporting such as: reporting obligations for extractive entities while specifying the level of disaggregation of the data to be submitted; and sanctions which could be imposed against extractive entities in the event of non-compliance or false declarations. In the short term, the EITI report recommended that application and renewal forms for mining licences and permits explicitly include a declaration of consent to disclosure of information required for compliance with EITI reporting and that such information be made available in a disaggregated, project by project, format.
With respect to the export data for the fiscal year covered by the EITI Report, including total export volumes and the value of exports by commodity, and when relevant, by state/region of origin, it was noted that Government Agencies’ records were different from one another as well as from the companies’ records. It was found for example that the Guyana Gold Board does not systematically crosscheck exports data against GRA’s records to identify the potential discrepancies, hence they both carry different data. (See Chart One attached to article which shows the difference in the export data held by GGB and GRA).
Going forward, it was recommended that GRA and GGB implement automated controls to ensure the comprehensiveness of export data reported by mining entities and to develop analysis tools to ensure consistency of exports data. Kaieteur News understands that this may include: putting in place a computerised system allowing the update and oversee of this data; collecting data from mining companies on a common and accessible IT platform for the relevant Government Agencies; and performing monthly control of exports data collected from Government Agencies to prevent discrepancies.
As for the disclosure of production data, including the volumes and the value by commodity, it was noted that the Guyana Gold Board and Guyana Geology and Mines Commission (GGMC) are the Government Agencies responsible for collecting reliable data to assess the companies’ liabilities in terms of royalties on production and the subsequent monitoring of their payments. The report highlighted, however, that GGB and GGMC do not have their own procedures to collect and control production data reported by mining companies. As a result, the report stated that the minerals production data declared by GGB does not match production values and quantities declared by extractives companies.