In separate press conferences on Thurs-day, APNU and the AFC excoriated the government on its failure to release the IHS audit report on the claimed expenses by oil companies and said that the government’s attitude on the matter reeked of recklessness and negligence.
Among a plethora of problems, the audit report which was submitted since March 2021 but not released, found that the Government of Guyana could contest US$214.4m in the expenses claimed by Exxon. This figure works out to 12.8% of the US$1.67b figure for the period 1999 to 2017. The government and the Guyana Revenue Authority (GRA) have said that they are not yet ready to release the report.
The A Partnership for National Unity (APNU) statement which was read by economist Elson Low said that despite the magnitude of the sums involved, “the government’s attitude reeks of collusion, negligence, and recklessness” adding “we must therefore be fearful with regards to the second audit being conducted by VHE Consulting for the period 2018-2020, which involves the sum of US$7.3B — that is, a sum over four times larger than the first audit.”
APNU said that if the second audit is “properly done” then they expect it to reveal greater amounts of contestable expenditures.
According to the statement, APNU said that the exposures in the Stabroek News on the audit of the operations of ExxonMobil (Guyana) from 1999-2017 should alarm Guyanese for three reasons; the fact that the preliminary audit found that 12.8% or US$214M of Exxon’s US$1.67B expenses could be disputed by the Guyana government as they were not allowable or did not have sufficient supporting documentation, the PPP/C government “true to form, kept citizens in the dark on the progress of the audit”, and the government is showing a “marked lack of urgency to complete the audit cycle and to engage ExxonMobil in recovering all disallowed expenses” even though the first audit report was submitted in March 2021 – over two years ago.
It pointed out that for perspective, Guyanese should note that the questionable US$214M (or $46B) is close to 6% of the total 2023 national budget but is bigger than the 2023 budget for the Ministry of Human Services by $6B, bigger than the budget for the Ministry of Agriculture by about $13B, and bigger than the budget for the Ministry of Culture, Youth and Sport by $39B.
APNU stressed that the “Government must of necessity protect the interest of the people of Guyana.”
Noting that it was the APNU+AFC government that hired the UK firm, IHS Markit, to undertake “this inaugural audit of all Pre-Contract Costs and all Exploration and Development Costs up to 31st December 2017”, they said that in contrast “the PPP has decided to play games with the country’s oil revenues.”
According to APNU, the revelations in the first audit justify their calls for the government to “walk the talk on building local capacity to effectively audit and monitor the operations of ExxonMobil (Guyana)” and on ensuring that all Guyanese “fully and fairly” benefit from the proceeds of oil.
Urging Guyanese to demand that the PPP/C government release all the audit reports and recover all invalidly claimed expenses, the party said that the “PPP’s cavalier attitude in the management of the country’s national patrimony will cost Guyana tens of billions of dollars. This disaster must not be allowed to persist.”
APNU added, “We believe matters have reached a point in the development of our oil sector where the country must now take stock, review its experiences, and recalibrate its oil development strategy.”
Going forward, the coalition urged that Guyana must “exercise intelligence and foresight to maximize the country’s oil revenues under the current Exxon PSA (Production Sharing Agreement) in parallel with efforts to ensure the people of Guyana obtain the maximum benefit that we can get”. APNU said that it found Vice President, Bharrat Jagdeo’s statement that the PPP/C government plans “to fast track the oil industry for a minimum of 15 years as reckless and a recipe for massive loss and leakages of revenue that is needed for the development of the people of Guyana.”
APNU in its statement proposed that Guyana develop a strategy to phase the development of new projects in the Stabroek block in a manner that allows the country to increase its takings through higher profit oil.
“At the moment, the 50/50 split gets Guyana only 12.5% of oil revenues – a percentage that seems unlikely to budge under the ongoing oil rush. With five FPSOs already … approved, the country is now well-positioned to seek a larger cut of the pie. In terms of numbers, the 25% profit oil must be allowed to increase so that the 50/50 split would earn Guyana an increase of more than 12.5%”, it said.
APNU posited that the government must invite Exxon to the table to work out a balance between expenditure and revenue that will allow Guyana’s current share of profit oil to gradually and quickly rise from 12.5%. “At these talks, the government must rely on expert technical advice to arrive at best-fit decisions based on Esso’s cost recovery statements and its expenditure forecasts for exploration, development, and production”, it said.
Violations
For its part, the Alliance For Change (AFC) said that it is now known that the PPP/C Government was handed the Audit Report since March 2021 and must have known that expenses in the sum of $214M were questionable; that Exxon was in breach of insurance requirements; and, that there were violations by Exxon and its local subsidiary in presenting its Annual Work Plan and Budget.
Its leader Khemraj Ramjattan said: “The AFC has been indicating for sometime now that the PPP Government has become strange bedfellows with Exxon in view of the serious attacks it launched whilst in Opposition against the Petroleum Sharing Agreement in 2016; and, its description that it was the `rottenest of deals’; and, that it will renegotiate and review the entire agreement once it gets into office.
“It has gotten into office and there has been a complete volte-face. Sanctity of contract has now replaced renegotiation. Its relationship with the oil major is now almost incestuous. The PPP has avoided chastising Exxon for environmental violations concerning flaring activities; for contract violations concerning insurance coverage; and now, a pathetic display of covering up from the Guyanese public the reprehensible conduct revealed by IHS Markit as to the operator’s inflated expenditures of some $214M US”, the party stated.
The AFC added that its Executive members, Dr. Vincent Adams, and its Parliamentarian, David Patterson, have constantly been urging Government for the release of findings of this IHS Markit Report as well as the Redford Report. It charged that the PPP Government has been hiding them from the people.
“With inflated expenses to the tune of US$214M and Government doing nothing for two years means that Guyana and its people have been denied a minimum of US$25M. When a little … boy snatches your chain valued $25,000 that is called larceny. But when a transnational giant denies the entire Guyana this massive sum of $25 M US it is called economics.
“In view of the Audit Report being out by way of Stabroek News, it is incumbent that the PPP Government releases it for public consumption and Parliamentary deliberations”, the AFC said.
The AFC said that it further feels that some “Faustian deal has been worked out between Government and Exxon to not renegotiate the Agreement nor scrutinize Cost Oil. In consideration, Exxon will grant to the PPP Government monies at the beck and call and whim and fancy of the Government, like recently happened in the matter of the Stadium at Corentyne”.
