On November 17th, after two weeks of concern that his government had nonchalantly conceded that the statutory period for the forensic scrutiny of US$9.5b in ExxonMobil’s expenditure had expired, President Ali provided an assurance that the gigantic sum would be audited.
What the Guyanese people need to know about this process is that if any portion of this US$9.5b is found to be improperly claimed as a cost then the country would have additional profits assigned to it. So that if only a fragment of this figure was disallowed, Guyana would stand to gain significantly. Why wouldn’t any government want this clearly established?
The other critical value of this audit is that it would give an invaluable insight into the way in which the Stabroek Block partners have conducted themselves over several years in relation to the country’s new-found oil and gas wealth. Have they been profligate in their post-contract claims? Have there been attempts to inappropriately import figures from other cost centres? Why wouldn’t any government want this clearly established?
It therefore remains baffling that the PPP/C government would sit on this auditing process and allow it to go into default and now requiring the acquiescence of ExxonMobil and its partners for the process to go ahead.
The government had advertised in April of this year for a bidder to audit these claimed costs and as the procuring agency the Ministry of Natural Resources is still to explain what happened to this tender and why it was not re-advertised. So, despite the assurance by President Ali his government is not off the hook on this matter.
In his answer to Stabroek News via his spokesperson, President Ali also made it seem as if the concern expressed by the media and others was misplaced. He went as far as to say that suggestions that the figure would not be audited was a “fairytale”.
“The Vice-President had also said that the government is looking at the composition of local experts and technical persons in keeping with his commitment to local content policy and he [the President] said that process is ongoing. The idea that the government is not pursuing the audit is a fairytale and the President is committed. The audits will take place and that the process is ongoing,” the President’s spokesperson told Stabroek News on November 17th.
If there was anything remotely of a fairytale in the reportage on the auditing and the general public concern expressed about it then the author would have been Vice-President Jagdeo who spoke authoritatively on the matter to the press on November 1st without any assurance that the auditing of the US$9.5b figure would be done.
The government is now scrambling to begin the auditing process in consultation with local firms and the question remains why only now? Had there been some unknown arrangement with ExxonMobil to forego this audit?
To date, the only auditing of oil industry costs that has been done pertains to the US$460m in pre-contract costs that had been enshrined in the unsatisfactory agreement between the APNU+AFC government and ExxonMobil’s subsidiary, EEPGL. The final audit report of the US$460m by IHS Markit, commissioned under the APNU+AFC government was submitted to this government earlier this year but it is yet to be released. Why not? That audit report would provide priceless information on what ExxonMobil and its partners have claimed as pre-contract costs. It would be important to know whether any significant claims had been rejected, ExxonMobil’s response to this and the final position of the auditor.
The public has a right to these findings and if President Ali’s government wants to be taken seriously in its role as custodian of the country’s patrimony then the IHS Markit report must be released and forthwith. Otherwise, all of the transparency talk that the government utters would be nothing more than hot air.
Considering the nature of the seriously flawed Production Sharing Agreement that Guyana has found itself yoked to, every single dollar of expenditure claimed by the partners in the Stabroek Block and the other blocks must be rigorously examined. No laxity in timelines as with the US$9.5b should be permitted. The government must now publish a schedule for all post-contract audits to be done and ensure that there are no slippages.
Stewardship of the oil and gas sector by the PPP/C government remains a cause for grave concern. This is particularly so as in the more than 15 months that it has been in office, it is yet to lay a single piece of legislation for this sector even though there are many pressing areas such as the regulatory commission, local content and activating the natural resource fund. Furthermore, the government is in lockstep with ExxonMobil on the accelerated extraction of petroleum notwithstanding the regulatory, environmental and climate change concerns that should give it severe pause. We await the release of the IHS Markit report.
