Confusion galore!

Sep 21, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – If ever there was a time for the President of Guyana to consider the future of his Vice President, within his government, that time is now.

The conundrum that now exists over the handling of the audit report of the oil companies’ pre-contract recoverable costs, presents the President with the opportunity to evaluate ministerial responsibility within the Ministry of Natural Resources.  The ongoing controversy surrounding the audit of recoverable costs incurred by oil companies between 1999 and 2017 has exposed the state of confusion within the Ministry of Natural Resources. This confusion not only jeopardises the nation’s economic interests but also plays into the hands of the very oil companies the government seeks to regulate.

The controversy revolves around the audit of recoverable costs incurred by oil companies operating in Guyana between 1999 and 2017. This audit aims to determine the accuracy of the costs claimed by these companies and the extent to which they are recoverable under the terms of the production sharing agreements (PSAs) – signed first under Janet Jagan and later under the APNU+AFC.

The Ministry of Natural Resources, tasked with overseeing Guyana’s burgeoning oil sector, is embroiled in a predicament. On one hand, the Petroleum Division is reported to have reduced the audit’s anomalies from a staggering US$214 million to a mere US$3 million. On the other hand, the Ministry is contended that the Petroleum Division is not authorized to make these reductions. This glaring contradiction exemplifies the confusion that plagues the ministry, and raises serious questions about its ability to effectively manage Guyana’s oil and gas sector.

One of the contentious issues concerns the role of the Guyana Revenue Authority (GRA) in conducting the government’s audit. This is an unadulterated conflict of interest, as the GRA cannot be both the auditor and the entity responsible for pronouncing upon the tax liabilities that may arise from the audit. The GRA’s primary mandate is tax administration, and it lacks the necessary independence to serve as the government’s auditor in this context.

The GRA is free to undertake its own audit. But only for tax purposes and the findings of that audit in keeping with client confidentiality has to be an internal issue within the tax entity and not shared with the government.

The GRA’s Act explicitly limits its scope to tax administration matters and does not confer upon it the responsibility to act as the auditor of the government. As such, for the GRA to arrogate to itself the role of government auditor is not consistent with its functions as defined in the Guyana Revenue Authority Act. Over on Brickdam, the confusion within the Ministry of Natural Resources deepens when we consider the role of the Petroleum Division in managing the oil and gas sector on behalf of the government. If the Petroleum Division, which is tasked with overseeing the industry, cannot pronounce on audit anomalies, it begs the question: who can?

An audit is not the final word; its findings must be carefully scrutinized by the government, primarily through its Petroleum Division. The subject Minister has to seek advice from technical experts, including those within the Petroleum Division, to determine the nature of any disputes arising from the audit. In this context, the actions of the Petroleum Division should be seen as part of the regular process of evaluating audit reports and making informed decisions based on expert advice.

As such, the Ministry of Natural Resources’ assertion that the recent actions of its Petroleum Division are unauthorized is deeply troubling. It reveals a lack of clarity regarding the division’s role and responsibilities and contributes to the overall confusion surrounding the audit process. Such a state of affairs not only hampers effective governance but also undermines the government’s ability to protect its own interests and those of its citizens.

In light of the current crisis of confusion within the Ministry of Natural Resources, it is imperative that decisive action be taken to address these issues and safeguard the nation’s interests. To this end, the President is duty bound to intervene in order to clarify the distinct roles and responsibilities of the Ministry of Natural Resources, the GRA, and the Petroleum Division in the audit process. This clarity will help eliminate conflicts of interest and ensure that each entity operates within its designated mandate.

Given the GRA’s inherent conflict of interest, the President should consider establishing an independent audit body responsible for conducting audits of oil companies’ operations. This body should be staffed by experts with no vested interests in the outcome, ensuring impartiality and credibility. The Petroleum Division must be empowered with the necessary technical expertise and resources to assess audit reports thoroughly. The subject Minister should rely on this expertise when making determinations regarding audit disputes. The President needs to take decisive action to define roles, establish an independent audit body and empower the Ministry’s Petroleum Division. And while he is at it, he should also evaluate the work political leadership within the Ministry.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• Guyana, Guyana Revenue Authority (GRA), interests, Peeping Tom, President

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