GRA already doing real-time monitoring of costs for thousands of imports by Exxon, subcontractors – Tax Chief Statia

Aug 29, 2022 News

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By Kiana Wilburg

Kaieteur News – Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia has confirmed that real time monitoring of all imports and declared costs to support ExxonMobil’s operations is already taking place.

Statia said the country is already using the Automated System for Customs Data (ASYCUDA) system to monitor all ports and purported costs for thousands of imports by the oil giant and its subcontractors, and it is based on declared costs that exemptions are calculated. He said these costs may include transactions between related parties, and when the cost audit is performed, competitive costs should be utilized.

The Commissioner General (CG) declared that he expects that the current cost audit now being carried out will do just that, among other things based on the Council of Petroleum Accountants Societies rules.

The tax chief further noted that while Guyana does not have the ability to do real time auditing, he assured that the authorities of the day are doing everything in their power to build in-country capacity.

Former Finance Minister and Economist, Winston Jordan in a separate interview was keen to note that the Guyana Revenue Authority has the systems that are necessary to track costs for all imports by ExxonMobil’s affiliate and Stabroek Block operator, Esso Exploration and Production Guyana Limited (EEPGL), its affiliated companies and subcontractors. Jordan said the tracking of these imports is what allows the tax agency to know and declare the value of exemptions to the industry.

Jordan said too that Guyana can monitor costs from as early as the stage pertaining to the review of the Field Development Plans.

Taking the foregoing into consideration, Jordan said he would disagree with Vice President, Bharrat Jagdeo who said that the country cannot do real time monitoring of bills being racked up by Exxon since there is no co-management agreement in place.

Jordan said, “No contract has to allow or disallow real time monitoring of costs. The Government has to put in the necessary infrastructure to ensure that it can monitor those costs in real time instead of waiting until you get all the bills in lump sum…I cannot fathom that a company is taking loans on the country’s oil and you are saying to me, you don’t need details of all this until the end of a year or until the auditing time. So I am powerless? No, I don’t accept that Guyana is powerless in that regard.”

The Former Minister said if the will exists, Guyana can utilize multiple mechanisms to track how the oil company spends and arm itself with the right experts who can ask the relevant questions that can ensure costs remain economical.

In Sunday’s publication, this newspaper also showed that the country is able to demand monthly and quarterly bills from Exxon. This is actually provided for in Section Seven of the 2016 Production Sharing Agreement.

Section 7.1 states: The Contractor shall prepare with respect to each Calendar Quarter, or on a monthly basis if requested by the Minister in writing, a Statement of Expenditure and Receipts under the Agreement. The Statement will distinguish between Exploration Costs, Development Costs and Operating Costs consistent with the individual categories specified in Sections 2 and 3 herein and will separately identify major items of expenditures within these categories. The statement will show the following: (a) Actual expenditures and receipts on a monthly basis for the period in question. (b) Cumulative expenditure and receipts for the budget year in question. (c) Cumulative expenditures and receipts since the Effective Date. (d) Latest forecast of cumulative expenditures to year end. (e) Variations between budget forecast and latest forecast, with explanations thereof Subject to 7.1, the Statement of Expenditure and Receipts shall be submitted to the Minister no later than thirty (30) days after the end of such Calendar Quarter or Month as the case may be.”

Under the arrangements of the contract, the Minister also has the right to audit upon 90 days written notice, at his sole cost and expense, accounts and records of the Contractor.

The contract states that the Minister may audit, examine and verify, “at reasonable times during normal business hours but not more than once per Calendar Year, all charges and credits relating to the Contractor’s activities under the Agreement and all books of accounts, accounting entries, material records and inventories, vouchers, payrolls, invoices and any other documents, correspondence and records necessary to audit and verify the charges and credits.”

During the annual audit, the Minister has the option to review items previously subjected to audit in earlier years.

However, the contract stipulates that the review shall only be carried out in conjunction with the annual audit for any given year. The PSA also states that at the conclusion of each audit, ExxonMobil and the Government shall endeavour to settle outstanding matters and a written report will be issued to the Contractor within 60 days of the conclusion of such audit.

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