Current pronouncements on $$ amounts forfeited; an uneducated guess at best and hasty and reckless at worst

Nov 18, 2021 Letters

Dear Editor,

Kaieteur News – A series of letters has been written in the papers recently concerning Guyana’s cost recovery audit. Many of these articles assert that Guyana is losing or forfeiting billions of dollars by not performing these audits on time. These statements are premature and demonstrate a gross misunderstanding of the purpose of a Cost Recovery audit. To be clear, a cost recovery audit is required under the Production Sharing Agreement, and it should be completed in a timely manner. Guyana is past due. To date, we have had a little more than six years to perform these audits, five years under the previous administration and a little over a year under the current administration.
Note however, a Cost Recovery audit is not a promise of a refund or reimbursement to the Government. Instead, it is done to establish the veracity of claimed costs. It seeks to determine whether those costs are legal, valid, and allowable under the terms of the agreement. If after the audit certain costs are disallowed, then those costs become part of profit oil which is then split 50/50 according to the agreement between Exxon and the Government of Guyana.
As of now, no one knows or can know how much monies are recoverable by an audit until after the audit is completed. In fact, this is precisely why an audit is required. Based on the results of the audit, there could be significant cost savings or not, accordingly; current pronouncements on dollar amounts forfeited or lost is at best an uneducated guess and at worst hasty and reckless.

Floyd N. Haynes

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