ExxonMobil throws Guyana $8.5B bill for local spending

Jun 16, 2021 News

– 2019, 2020 bills yet to be audited despite two-year deadline

Kaieteur News – President of ExxonMobil Guyana, Alistair Routledge, recently announced that his company has spent more than $8.5B on 600 local suppliers for the first quarter of 2021. As the subsidiary gears to hand this bill to Guyana, it should be noted that the government is still to audit the company’s local content bills for 2020 and 2019 which amount to $31.9B and $24.3 B respectively. The expenditure for 2019 to 2020 was also for investments to local suppliers.

ExxonMobil Guyana Head, Alistair Routledge

According to Guyana’s Production Sharing Agreement (PSA) with ExxonMobil and its partners, CNOOC and Hess Corporation for the Stabroek Block, the state has a two-year deadline within which to audit these costs. If that time elapses, the costs have to be accepted as correct.
It therefore means that Guyana has up to the end of 2021 to audit the local content bill for 2019 and up to 2022 to complete the audit for expenditure, which the company claims was made in 2020.
It should be noted however that Guyana failed to audit, in a timely manner, costs the company incurred for 2015 to 2018, and hence those have to be considered as correct. Kaieteur News had reported that those costs for the same period amount to over $20B.
This newspaper, via several articles, had explained that local content is the value that an extraction project brings to the local, regional or national economy beyond the resource revenues. This definition is supported by the Natural Resource Governance Institute (NRGI). The anti-corruption watchdog has oftentimes said that a challenge with local content is that it can open the door for corruption and elite capture of an industry. In this regard, corrupt public officials can position themselves to benefit from oil companies’ contracts, and private local companies can partner with oil companies to create a false impression about the contractor’s local content efforts.
It is on this premise that Kaieteur News has challenged ExxonMobil many times, to provide transparent, detailed breakdowns of how the money it claims was spent.
For almost six years, the company has ignored calls to provide a disaggregation of the money it claims was spent on an annual basis. This would include for example, a breakdown of salaries paid to Guyanese by ExxonMobil Guyana and its joint venture partners. In addition to this, ExxonMobil has not provided, for independent verification, the names of the Guyanese businesses it used from 2015 to now. 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 founded 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, including Sonia Noel, Chontelle Sewett, Andron Alphonso and Mokesh Daby.
As part of one of its statements last 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 had 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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