Concerns about length of time to complete audit of Exxon’s US$1.6B costs justified – VP Jagdeo

Apr 07, 2023 News

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By Kiana Wilburg

Kaieteur News – Vice President, Dr. Bharrat Jagdeo said yesterday that citizens are justified in being concerned about the length of time it is taking authorities to complete the audit of US$1.6B in expenses racked up by ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).

The official was keen to note however that the Guyana Revenue Authority (GRA) as well as the Ministry of Natural Resources, is taking every possible precaution to ensure the country does not allow inflated or scrupulous cost claims to slip through the proverbial cracks.

The chief policy maker for the country’s oil industry said the foregoing statements at a press conference that was held at Freedom House.

The People’s Progressive Party’s (PPP/C) General Secretary dismissed accusations that the government is hiding the report which was comprehensively reported on by the Stabroek News.

The Vice President said, “The criticism about the length of time it is taking is fair but this audit is being done between GRA and the Ministry of Natural Resources with a minimum of 20 technical staff (overlooking the process) for two years. It is not secret…It is available to the technical staff.”

Earlier yesterday as well, the People’s National Congress Reform (PNCR) held its weekly press engagement where it addressed the released findings of the audit report.

Specifically, the party’s economic advisor, Elson Low said the current slothfulness of the government in addressing the findings of the audit is the kind of approach that could result in billions of dollars in revenue leakages for future audits.

Jagdeo was keen to point out however that such a statement is baseless while noting that only US$214M has been flagged as questionable costs by British auditor, IHS Markit.

Jagdeo said, “The audit said it is about US$200M of expenditure that is being challenged. Not billions. You cannot lose it because it is identified as potentially a source of funding that if they can’t give proper explanation, it will therefore go towards profit sharing.”

The Vice President further noted that it is actually about US$180M in expenses for which Exxon has to provide justification for. He said, “Exxon has to provide additional documentation so let us be fair about this.” The official said this aspect of the audit has to be completed before one can fully assume that the full US$214M can be contested.

Jagdeo also noted that government has been pressing its technical officers to get this audit done as soon as possible. “So while it is going slowly, it is getting the required attention at the technical level,” the Vice President said. He categorically stated that the relevant authorities have zero interest in rubberstamping Exxon’s cost recovery bills.

It is now more than three years since IHS Markit is yet to complete an audit of US$1.6B in expenses for the oil-rich Stabroek Block. Those costs were incurred during the period 1999 to 2017 by EEPGL.

Confirming the status of the audit was Commissioner General of the Guyana Revenue Authority, Godfrey Steven Statia. His clarification came on the heels of two articles published by the Stabroek News on IHS Markit’s report that it provided to the PPP/C regime. Stabroek News comprehensively, and clearly, outlined that there were some US$214M in costs that could be contested by State authorities.

GRA’s boss did not denounce these figures as inaccurate. He did note however that IHS’ report, as is being quoted, is not the final document, adding that government is now at the stage of awaiting feedback from Exxon’s subsidiary. He also did not provide a timeline on when this process would be completed. Statia also noted that the government will make the report public at the appropriate time.

The length of time the audit report is taking to be completed has caused some degree of concern among observers. Some individuals have said, for example, that authorities should properly explain why it is taking so long to complete an audit for a company when the Audit Office of Guyana takes approximately 12 months to audit and produce a report on the nation’s accounts.

There are also concerns about the accelerated pace at which government is approving oil projects and the difficulties that would ensue for cost regulation and monitoring since it is still stuck at auditing costs associated with the 1999 to 2017 era. A second audit is currently underway for costs totalling US$7.3B which were incurred from 2018 to 2020. That contract was awarded last year May. That too is still ongoing.

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• Audit, Dr. Bharrat Jagdeo, Exxon, ExxonMobil, Vice President

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