Real time monitoring of costs

Aug 29, 2022 Editorial

Kaieteur News – It is becoming clearer why Vice President Bharrat Jagdeo is so hesitant, so consumed with anxieties, when he has to face the Guyanese media and speak about our oil wealth. He is fearful of putting his foot in his mouth, and speaking out of turn. Despite his best efforts, he did it again with real time monitoring of costs incurred by the oil companies in their ongoing operations offshore (“ExxonMobil 2016 contract contradicts Jagdeo’s claim that Guyana cannot do real time monitoring of costs -contract gives Guyana the power to demand monthly bills” -KN August 28).

Dr. Jagdeo asserted that Guyana is blinded by the lack of a ‘co-management arrangement’, which prevents us from knowing on a timely basis what costs are accumulated by ExxonMobil, and if the oil company is taking us for a ride by cheating us with inflated bills. Through long association with Vice President Jagdeo, we have learned not to take his word on anything without checking for ourselves. We are glad we did, as our efforts have paid off with what sharply conflicts the Vice President’s position, in that the 2016 contract does contain clauses that make provision for co-management in both policy and practice.

Section 7.1 of the 2016 contract 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.” There is no debating of Section 7.1, because the facility for co-management is written there in stone, and painted in black and white. We are surprised that Dr. Jagdeo missed that, and we hope that it was not deliberate. Moreover, we are surprised that the Minister of Natural Resources has not taken the fullest advantage of Section 7.1 of the contract by demanding those bills. This would effectively put this country in the position of confidently watching out for its own interests, while keeping a watchful eye on those it does this oil business with, meaning ExxonMobil and its partners, be they in the form of suppliers, vendors, and subcontractors. Just recently, there was the warning to Guyana to be on the lookout for ‘shell companies’ which could be used by ExxonMobil to pay itself from this country’s ignorance or negligence.

We at this paper are baffled that the responsible Minister has not seized the provisions of Section 7.1 to stay in line, if not be on top of, the expenses that ExxonMobil says that it incurred. To get the most mileage the Minister must be demanding those bills on a monthly basis, for we believe that quarterly leaves too much time for ExxonMobil to exploit us some more. It is too long after, and the equivalent of constant chasing after ExxonMobil in attempts to catch up and apply some control to possibly runaway, if not inflated, expenses. What ExxonMobil has enjoyed is the freedom to spend in any amount to buy whatever it sees fit, which could stretch into the imaginary.

Further, we are also mystified that Vice President Jagdeo does not know of the provisions of Section 7.1; or that his researchers and advisors did not alert him to the existence of this co-management arrangement in the 2016 contract. We are not going to make any assumptions, or draw any conclusions, about what the Vice President knew, or when he did. What we do know is that we don’t have to wait on ExxonMobil for it to submit its bills, but to work almost alongside with the company as it spends and buys. We can question then, we can check then, and we can know then. At the very least, we would have a better idea of what is happening in real time how the expenses are racking up, and significantly cut down on the accumulation of bills.

In addition, ExxonMobil would be conscious that there are Guyanese looking over its shoulder, and shadowing its spending closely. This would be enough for the oil company to go more carefully, be a bit more honest in its dealings with this country. With real time monitoring of costs, Guyana could be closer to getting genuine value for the money spent by ExxonMobil.