3 months after receiving bids Govt. yet to award contract to audit 3 years of ExxonM’s expenses

Jun 19, 2024 News

Minister of Natural Resources, Vickram Bharrat

Kaieteur News – Three months after receiving bids for the audit of oil major, ExxonMobil’s expenses incurred over a three year period, the government of Guyana (GoG) is yet to award a contract.

Such audits are critical to ensuring that this country was not cheated by the oil companies through the procurement of goods and services from the company’s contractors.

This process is particularly important since the oil contract with Exxon provides for the operator to deduct 75% of the monthly revenues generated to clear its expenses. The remaining 25% is then shared with Guyana as profits.

Since March bids were submitted to the National Procurement and Tender Administration Board (NPTAB) by three firms from both local and international consultants to audit Exxon’s 2021, 2022 and 2023 bills.

VHE Consulting (Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc.); Grant Thorton UK LLP and PKF Barcellos Narine & Company; and M. Sukhai & Company (local) in joint venture with Info Works Solutions Ltd had expressed interest in conducting the audit.
On Tuesday, Minister of Natural Resources, Vickram Bharrat on the sidelines of an event told Kaieteur News that the contract for the review of the company’s expenses is expected to be awarded soon.

According to him, “We are in the final stage; we should award that very soon. The evaluation team is looking at it so I don’t want to pre-empt them, I don’t want to influence the process but it will be soon.”

The Terms of Reference (ToRs) said the successful consultant is required to conduct a pre-audit analysis; devise an effective audit plan inclusive of an appropriate methodology; execute the audit in adherence to the provisions of the Stabroek Block Petroleum Agreement and applicable local laws, regulations, and procedures; as well as international good practices and standards.

The scope of works also includes conducting verifications of the crude oil valuation pursuant to the provisions of the petroleum agreement for the audit period as well as verifying royalties remitted to the government for that period. Additionally, the selected company will also be required to validate the accuracy of the total government share of petroleum for the period under review, and assessing the impact of the audit on future profit oil revenues.

To date, two audits of the company’s expenses have been completed. The first audit was done by a British firm, IHS Markit for the period 1999 to 2017. That audit examined expenses totalling US$1.7B.

Meanwhile, the second audit was conducted by a local group, Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc. That audit examined expenses totalling US$7.3B covering the period 2018 to 2020.

Based on the agreement, Guyana can conduct an audit within two years from the end of each calendar year. At the conclusion of the process, the Contractor must be furnished with the report and its findings within 60 days to provide a response. The response from Exxon will detail its objection or acceptance of the audit claim, along with explanations thereof. The contract also allows the subject Minister to conduct further investigations within 60 days of receiving the Contractor’s response.

It must be noted that the PSA makes it clear at Section 1.5 (b) that: “…If within sixty (60) days of the Minister’s further investigation, the Parties are unable to agree to the disposition of the Minister’s audit claim, the claim shall be submitted to the sole expert in accordance with Article 26 of the Agreement.” Article 26 of the contract sets out the conditions as it relates to arbitration.

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