Can’t have the cake and eat it too: The post-2017 cost audit 

 Dear Editor,

I’ve noted with much amusement and perplexity the rather fatuous obsession by certain sections of the media with the post-2017 cost audit. In fact, the bombardment has become a media frenzy that has blown out of proportion and has now become a political football. Even those utterly oblivious to the process and the industry in its eternity have now become leading critics.

The main contention that seems to be at play is the delay by the Government in auditing the post-2017 cost recovery audit. While I fully agree that this is a critical exercise and must be judiciously and objectively executed, I beg to differ on the urgency of the exercise. First, this Government has the oil companies on a short leash for those who are not aware. That is, we dictate, and they follow. While of course we now have to deal with a burdensome PSA because of the APNU/AFC Government, this Government is putting things in place to ensure that Guyana gets its fair share of wealth from the oil and gas industry. Amongst others, local content backed by legislation is critical.

Somewhere around February of this year the President and the VP and several senior Cabinet members launched the revised draft Local Content Policy document for public consultation. Thereon, local content has remained on the front burner for the many stakeholders, especially the Private Sector. The general consensus is that local content is critical for national development and will play a crucial role in stimulating local business activities. However, one of the likely shortfalls is our lack of capacity to fully benefit from these opportunities.

Having recognised this looming impediment, the Government is pushing aggressively to bring the policy to finalisation and have in place a legislation that would ensure enforceability. In tandem with this legislative agenda, plans are also afoot to execute a mass training programme and attract some of the most talented to our shore in a bid to fill the imminent supply void of skilled labourers.

The post-2017 local content audit is a prime example of how this Government intends to treat local content. Critically, in order to build local capacity in this area, our locals must partake, even in collaboration with external firms. Hence, currently local firms are in the process of partnering with foreign companies to commence the post-2017 cost audit. Not only will Guyanese rest assured that our own in-country experts are joining the battle to ensure that we get our fair share of the pie, but a few years from now our own financial experts would be more than capable to do the job in its entirety. This is an accomplishment that we as Guyanese should all be proud of.

In this age of information, ignorance is a choice. Just recently, a leading figure in the opposition political camp has self-promoted himself to the stature of lead ignoramus by claiming that (based on his own calculations) “Guyana could have recouped approximately US$1.1 billion (GYD235.2 billion) from the audit of the oil giant’s expenses in the prolific oil concession” (KN, Nov 9, 2021). Unfortunately, these ill-informed types of comments have become the norm from members sitting in the opposition camp. It is downright preposterous to speculate, even before the commencement of the process, Guyana could have earned US$1.1 billion. These types of comments reveal the kind of intellectually shallow individuals that are vying for supremacy. However, inter alia, I think part of the issue surrounds relevance. Oil and gas is presumably the most discussed topic in Guyana, and the media seem to be infatuated with the industry. Therefore, any negative comment quickly gets blown out of proportion and pontificate upon at length.

Those who are familiar with the audit system know it’s almost impossible to speculate with absolute certainty the outcome of an audit before the completion of the process. Second, there must be credible evidence that there is a breach in the accounting system, followed by a successful litigation process before the disputed amounts could be withdrawn from the cost bank. Until such, any comment on the actual amount of cost that could be deducted is mere wild speculation. Even if we managed to slash US$1.1 billion from the cost back for some reason, that doesn’t mean we (as in Guyana) are entitled to the equivalent amount. The main advantage of reducing cost would be seen in a reduced payback period, and higher profit sharing. To suggest that the entire amount would go to Guyana is grossly incorrect.

Sincerely,

Mark Sammy