New company to audit oil expenses in a matter of weeks -VP Jagdeo

Apr 30, 2022 News

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– says Govt. to fund training for auditors, accountants, boost national auditing capabilities

By Zena Henry

Kaieteur News – In a matter of weeks, a new company is expected to commence auditing the expenses incurred in the development of the country’s oil wealth. This was the update provided by Vice President Bharrat Jagdeo when he held a press conference at the Office of the President (OP) on Friday.

Guyana has a contractual two-year timeline to ensure the audit of expenses is handed down by oil partners operating in its offshore Stabroek Block. Guyana has been hit with some delay in assessing the fairness of these development sums, attributed to a lack of capacity by local companies to ensure the relevant checks and balances.
Vice President Jagdeo told media operatives that given the available information, Guyana is expected to commence auditing of the 2017 to 2020 oil related expenses as soon as the new company is chosen to undertake the work.
Originally, Jagdeo explained, Guyana had completed an initial oil expense audit up to 2017, following which the government registered some issues regarding the expenditure. While he opted not to give details, the Vice President informed that there is now an active process pursuing those expenditure disagreements.
Subsequently, tenders were requested with an expressed desire by the government to have a local group involved in the handling of future audits. The VP noted that while further details on the selection process could be sought from the Natural Resource Ministry, he is aware that the negotiations have been completed. “So, in a matter of weeks the new company will start the audit that will go from 2017 to 2020.”
Additionally, the Guyana Revenue Authority (GRA) will be receiving funding to upgrade their capabilities outside of that which examines the fairness of the oil expenditures. “We also have to have expertise to do an audit in GRA to see that on the tax side Exxon is complying,” Jagdeo stated.
He continued by stating that there are issues that the government is addressing in relation to the oil partners. An example he offered, was that Guyana had to refuse ExxonMobil’s request to get government’s permission to “bring basically an unlimited amount of vehicles.” To this, the government said no, Jagdeo informed, adding that the related service must be procured from Guyanese.
VP Jagdeo also informed that moves are being made to improve the national auditing capacity. He said he has asked Finance Minister, Ashni Singh, “to meet with the insurance association (sic) so that we can fund training for all the members; accountants and auditors – that government is willing to pay for all the training and upgrade through the association working with the ministry so that we can upgrade national capabilities.”
On another note, VP Jagdeo was asked about performance audits that will ensure value for money with major projects. With more money from the oil and gas sector and a wider scope for investment and developmental projects, among others, questions have been asked about Guyana earnestly working to ensure the stated benefits and returns are derived from the various investments.
This is where the Auditor General comes in and that agency, Jagdeo added, has been trying to build capacity in ensuring performance audits. The performance audits, as highlighted by some commentators will ensure that Guyana does not invest large sums of money into projects – such as the Amaila Falls Hydro project, the fibre optic cable project and the Skeldon Moderisation project, among others – and not receive value for money. “So when they (Auditor General agents) go (to check the books) they just don’t do the financial audit, they can do performance audits.”
The VP informed that there is overall, “a strong process of building national capabilities.” He said that the GRA is building capacity, and by including Guyanese in the audits, for the first time, Guyanese companies will now be able to build capacity on their oil and gas expertise.
Ensuring Guyana can confirm the truth of oil related expenses is very important. Conducting those checks and balances has the potential to save Guyana as much as US$1billion dollars some experts have stated. This is because, padded or inflated oil related expenses is usually a feature of oil companies and countries unable to ensure that they are not paying bloated oil sums usually fall into this trap. So far, Guyana has an over US$30B oil expense bill. Apart from the pre-development figures, Guyana has a US$10 billion sum from its Liza 1 and 2 wells, US$9 billion from Payara and US$10 billion from the Yellowtail development.

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