Dear Editor,
A series of letters have been written in the newspapers recently concerning Guyana’s cost recovery audit. Many of these articles assert that Guyana is losing or forfeiting billions of dollars by not preforming these audits on time. These statements are premature and demonstrate a gross misunderstanding of the purpose of a Cost Recovery audit. To be clear, a cost recovery audit is required under the Produc-tion Sharing Agreement, and it should be completed in a timely manner. Guyana is past due. To date, we have had a little more than 6 years to perform these audits, five years under the previous administration and a little over a year under the current administration. Note however, a Cost Recovery audit is not a promise of a refund or reimbursement to the Government. Instead, it is done to establish the veracity of claimed costs. It seeks to determine whether those costs are legal, valid, and allowable under the terms of the agreement. If after the audit certain costs are disallowed, then those costs become part of profit oil which is then split 50/50, according to the agreement between Exxon and the Government of Guyana. As of now, no one knows, or can know, how much monies are recoverable by an audit until after the audit is completed. In fact, this is precisely why an audit is required. Based on the results of the audit, there could be significant cost savings or not, accordingly; current pronouncements on dollar amounts forfeited or lost are at best uneducated guesses, or worst, hasty and reckless.
Sincerely,
Floyd N. Haynes
