As questions mount on the government’s failure to have US$9b in Exxon-Mobil’s expenses audited, it has been disclosed that the Ministry of Natural Resources had been responsible for the evaluating of the financials of companies that had bid for the contract but it apparently abandoned the process without advising the procurement board.
The expiration of the deadline for the examination of the expenses means that the country has not been able to determine if the US$9b expenditure by ExxonMobil and partners was warranted. If the expenses were overstated it would have caused a reduction in Guyana’s profit oil take.
For the third day running Stabroek News yesterday sought a response from the Ministry of Natural Resources (MNR) to no avail. Sources told this newspaper that the ministry has not said anything to the National Pro-curement and Tender Administration Board (NPTAB) on tenders that were submitted for the auditing of the US9b in expenses. The tenders were opened in April of this year.
It is unclear how the ministry came to be responsible for evaluating tenders, given that the statutory process lies with the NPTAB, but one source explained that oil and gas contracts are evaluated by a special body, given that it requires expert technical evaluation while the NPTAB has “administrative oversight”.
The government’s failure to have the massive US$9b in expenses audited will raise serious questions about its management of the sector.
It was Vice President Bharrat Jagdeo who last week casually disclosed at a press conference that ExxonMobil’s post-2017 expenditure for the Liza-1 and Liza-2 wells would not be audited as government was not able to select a strong local group to undertake it. This statement was made although the government had advertised this year for foreign firms.
“We have been very disappointed that we have not been able to select a group to do the audit of the post-2017 expenditure on Exxon. The reason is we did not have a strong local content. We had two local groups that came in but they were not strong enough. We want to build a capacity in Guyana to do this audit,” Jagdeo said.
“We think our people have enormous skills, forensic skills, auditing skills, and we are looking to see if we can’t have an arrangement where we have a consortium of local people partnering with a foreign company so we can build capacity right here in Guyana. We are disappointed that from the individual bids we did we have not been able to do this. When I get back from Scotland (from the COP26 conference) I have asked the minister to see if we can’t get all the groups that expressed interest to see how we can partner, they can partner with a foreign company to do this audit. We also have to build this capacity in GRA (Guyana Revenue Authority). GRA has been mandated to build a capacity to do this. But it is a disappointment because it has been quite a while,” he added.
However, there has been no information on if the MNR as the procuring entity had informed the companies of why they did not qualify or why the Government of Guyana never announced that none of the tenders met the required criteria. No explanation was given on why the contract was not again advertised or if government had asked ExxonMobil to extend the two-year statutory period, given the lack of capacity here and the impact of the COVID-19 pandemic on works globally.
Transparent
President Irfaan Ali had in August of this year promised that his government would be transparent on activities in the oil and gas sector and that it would have built a website to publish information for the public.
“I do not believe that we have been hiding anything as it relates to the oil and gas sector,” he further contended as he claimed that “every piece of information that the government has, every discussions we have had… has been made public and shared with the public.”
Ali yesterday returned to Guyana from Scotland where he had been attending the COP26 climate summit. This newspaper has reached out to his press and communications department for a response on the auditing of the US$9b.
In 2018, when he was Opposition Leader, Jagdeo had blistered the APNU+AFC administration over its sloth in auditing US$460m in ExxonMobil’s pre-contract costs and when the PPP/C took office last year he assured that all costs will undergo strict security. But now in 2021, as PPP/C Vice-President, he has casually excused his government from forensic scrutiny of nearly 20 times the US$460m.
Jagdeo had said last year that the $460m pre-contract costs was under review and that the Department of Energy had advised that it had audited up to 2017 and that the review of the report was still being looked and that the Department of Energy has told him that it had someone reviewing other costs up to 2017.
He reasoned that while the US$460m has been the focus, the nation has to be reminded that post contract costs totaling over US$20B have been added to that total and that will be the key area of scrutiny. “The Department of Energy said to me they have a person reviewing costs up to 2017, we have not gotten around to that as yet. We will ensure that every cent, from the beginning, to Payara, all of it, has to be reviewed,” he said.
“The post-contract costs are the bulk of it…we are talking upwards of (US$) 20B that have to be reviewed. It is a task we have to come around it. That is looking out for national interest,” he added.
No word had ever been given of a person or firm undertaking audits up to 2017 as up to the time governments changed in August of 2020, then Department of Energy Head Dr. Mark Bynoe and GRA Commissioner Godfrey Statia had only said that IHS Markit had concluded auditing of the pre-contract costs.
“We have actually completed our part and have given it to the Department of Energy to give to Exxon. When you are finished with an audit, you have to give the other party a chance to respond. That is normal. You have to inform the party of your findings, if not you have not completed the audit so that is where I know we last were,” Statia had told Stabroek News when contacted.
This newspaper was also told that the report was handed back to the consultant for the completion of some work and it was returned to the Department of Energy and back to IHS Markit for a procedural correction.
