Audit Liza 1, 2, Payara Project costs before approving Yellowtail -Former EPA Head

Nov 26, 2021 News

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By Davina Bagot

Kaieteur News – Former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams is calling on the Government not to approve ExxonMobil’s fourth project- the Yellowtail Development -, until the US-based oil giant agrees to a belated audit of its US$9.5 billion spending.

The Government said that the audit was not conducted as the country lacks the skills to get the job done. However, Adams believes the administration should use as leverage the Yellowtail project which is yet to be approved to force Exxon into extending the time for the completion of the audit. Adams said to not conduct the audit could result in the giveaway of billions to the oil giant.
It was Vice President, Bharrat Jagdeo, who had said that the government is disappointed that it had not been able to push through with these critical audits. He said the absence of strong local groups to do the audits is what stymied the process. The only costs Guyana stands a chance of auditing and refuting if unreasonable charges are found, are those occurring from 2019 onwards. It therefore means that the PPP/C administration still has ample opportunity to review costs expended for ExxonMobil’s Payara Development Project in the Stabroek Block. This project is expected to cost US$9B.
International transparency bodies have strongly contended that the two-year deadline the government has accepted, along with the fact that it can only do one audit per year on Exxon, is not sufficient. They have stressed that the timeline should be extended. Specifically making this point over the years is Oxfam America. It has made this perspective known since 2015 alongside the International Monetary Fund (IMF). Oxfam America, a confederation of 20 charitable organisations which seeks to fight poor governance of extractive wealth, has said that the expiration periods for audit rights are set out in petroleum contracts and tax laws. It stressed, however, that these deadlines differ from one country to the next. It noted that in Ghana and Kenya for example, the authorities there retain the right to complete auditing companies within seven years. In Peru, the time limit for audits is a minimum of four years. Even in the USA, the transparency body highlighted, audits are allowed to be completed within a minimum of three years.
Oxfam warned however that even a three-year deadline is not advisable for developing countries such as Guyana, given the limited financial and human resources that are likely to delay the audit process. Further, the organisation noted that it is equally important to keep an eye on record-keeping provisions in the petroleum contracts and tax laws. It said, “Oil companies should be required to keep all their records in-country for easy access by the auditors during the audit period.
For his part, speaking at a news conference by the Alliance for Change, Dr Adams said, “The AFC joins the countless number of concerned Guyanese and the international community in calling out what could only be described as negligence by the PPPC Government against its people, in its nonchalant declaration not to audit Exxon’s $9.5 Billion bill, due to failure to meet the audit deadline; a non-action that could conceivably become a give-away of Billions of dollars to mega rich Exxon, with the robbery of every single Guyanese citizen of millions of dollars”.
According to Adams, the excuse of not having the expertise to conduct such an audit is a “highly incredulous excuse” since the AFC is well aware of a highly qualified firm, owned by a Guyanese in the Diaspora, that submitted a bid to conduct the audit. He questioned, “Is the Government speaking with forked tongues when it extols itself as so badly wanting the help of the Guyanese Diaspora, but at the same time signaling that they are not being counted as Guyanese.”
The former EPA head said that the government’s attempt to escape this backlash, is to distract the public with an empty promise to build capacity to hopefully get Guyanese to perform such tasks, but this is nothing less than a promise that is contrary to its own philosophy and practices. Adams explained, “Firstly, we all know the trustworthiness index of the Government keeping promises, especially when it comes to Exxon which was described by the Opposition Leader as “international bullies” with the “Government being under Exxon’s hammer.”Secondly, there are too many unanswered questions about this promise, since the fact remains that there is no provision in the Agreement for reopening the audit after its two-year expiration period”.
He quoted sections of the agreement with ExxonMobil where it was settled that “the Govt shall not amend, modify, rescind, terminate, declare invalid, require renegotiation, compel replacement or substitution…without the prior written consent of the Contractor”.
In light of this, the former EPA head questioned how would the Government then keep its promise. He inquired, “Is the Government making this promise with Exxon’s consent per the Agreement; or without consent, in violation of the Agreement which the Government holds as sacred? And does the Government now find itself being “hoisted by its own petard” with being forced to re-negotiate this sacrosanct Agreement?”
As a consequence, Adams noted that as a proven fail-safe way of saving face of its dilemma, the AFC is calling on the Government to not approve the Yellow-Tail project until Exxon agrees to the Audit. According to him, a similar demand of the EPA under the previous administration proved to be successful in obtaining unlimited liability assurance coverage from Esso Exploration and Production Guyana Limited (EEPGL) as a condition for approving the Liza 2 project; but unfortunately, the PPPC Government promptly reversed that decision.

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