Guyana urged to beef up audit capabilities and introduce strong reporting standards to avoid highway robbery - Int’l Advisory Group

Guyana urged to beef up audit capabilities and introduce strong reporting standards to avoid highway robbery – Int’l Advisory Group

Dec 17, 2022 News

Kaieteur News – ‘Chatham House’, an independent Policy Institute headquartered in London, is encouraging new oil players like Guyana to invest quickly and heavily in beefing up their auditing capabilities.

The international group which provides Guyana and other new producers with advice stressed that a robust monitoring system with strong reporting and accounting standards for oil companies’ expenses is key to preventing significant revenue loss to the State.

It said an efficient auditing and administrative body for the industry is a fundamental of good governance hence its recommendation that all Governments invest in building capacity.

It said even from the early days of exploration, Governments should already move to centralize geological data management. When discoveries are made, ‘Chatham House’ said it is incumbent on new producers to allocate more resources to building capacity in auditing and monitoring operations.

It said in one of its reports, “If discoveries reveal that the country can count on a significant production lifespan, the Government must invest in its administrative capabilities and boost its own knowledge of the petroleum sector. This will enable the Government to improve the accountability of the sector.”

‘Chatham House’ said the foregoing, together with establishing an independent regulatory agency, introducing key mechanisms for public accountability, including audits of state agencies and ensuring regular disclosure of audit information to the public, will all serve as critical antidotes to corruption.

Guyana back in 2019 had received a US$20M loan from the World Bank to develop its abilities to govern the oil sector. The PPP/C administration has used a portion of it to conduct cost recover and performance audits but there is still much work to be done to boost the nation’s army of auditors.

Kaieteur News understands that the World Bank loan funds a project with four components: Component A – Enhancement of Legal Framework and Stakeholder Engagement: (US$3.20 M), Component B – Capacity Building of Key Institutions: (US $10.70 M), Component C – Enhancement of Fiscal Management Systems: (US$3.50 M), and Component – D. Project Management & Project Preparation Facilities: (Cost $2.60 M).

For explanatory purposes, the first component being for the enhancement of legal framework and stakeholder engagement, aims to support the update of Guyana’s legal and regulatory frameworks for the governance and oversight of the sector as well as support stakeholder engagement and transparency. This component includes two subcomponents: update the legal and regulatory frameworks for the sector, and support stakeholder engagement and transparency.

The second component on the capacity building of key institutions includes four subcomponents: support immediate technical needs at key institutions with responsibility for oil and gas, support critical training needs at key institutions with responsibility for the sector, build up petroleum data management, and strengthen environmental and social management.

The third component is the enhancement of fiscal management deals with, among other things, improving Guyana’s capacity to manage the Natural Resource Fund.

Finally, the fourth component gives proper management and coordination of all project activities financed under the project. More specifically, it provides support and builds the Government’s systems for procurement and financial management, while allowing for the implementation of safeguards for proper management, monitoring.

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