THE Ministry of Natural Resources is pursuing a cost recovery audit and validation of the Government of Guyana’s profit oil share. On Sunday, the ministry published an advertisement inviting Expressions of Interest (EoI) for firms to conduct the exercise.

“The objective of the assignment is to conduct an audit of the recoverable contract costs as determined by the Petroleum Agreement (PA), taking into consideration accounting good practices. International accounting standards as well as auditing procedures and standards,” the notice read.

It further explained the four components of the project, which entail the auditing, examining and verifying all available documentation and records necessary for charges and credits relating to the contractor’s activities under the applicable PA for the period January 2018 to December, 2020.

Additionally, the project would require verifications of Crude Oil Valuation for the audit period as well as the verifications of royalties remitted to the government during the aforementioned period. The audit is also expected to determine the accuracy of the total ‘Government Share of Petroleum’ for the period under review.
A component of the audit project will require the provision of on-the-job training for selected staff a number of government agencies including the Natural Resources Ministry, the Guyana Revenue Authority and the Office of the Auditor General.

The four-month assignment is expected to commence by June 2021, as part of the Guyana Petroleum Resources Governance and Management Project being financed by a US$20 million loan from the World Bank.

The loan, which was approved during the first quarter of 2019, is intended to finance specific initiatives that support the enhancement of legal and institutional frameworks, as well as capacity-building for the key institutions tasked with managing the oil and gas sector in Guyana.
The monies, according to the World Bank, are being disbursed in four parts, and will be directed towards specific components of the overall efforts, commencing with the ‘Enhancement of Legal Framework and Stakeholder Engagement’ for which US$3.20 million has been allotted.

CAPACITY BUILDING

The second component deals with ‘Capacity Building of Key Institutions’, with a budget of US$10.70 million; the third aspect of the project deals with the ‘Enhancement of Fiscal Management’ at a cost of US$3.50 million. The final component of the project relates to ‘Project Management and Project Preparation Facility’ at a cost US$2.60 million.
A recent analysis contained in the World Bank’s ‘Implementation Status and Results Report’ shows that since 2019 to present, the State has only utilised 23 per cent of the US$20 million loan; this accounts for approximately US$4.77 million of the sum. The report indicated a slight delay in relation to getting internationally recognised consultants who meet the requirements needed to execute various components of the project.
Back in March, the government issued a call for consultancy services to develop the legal and regulatory frameworks for the oil and gas sector. This requires the execution of a comprehensive review of Guyana’s existing legal and regulatory framework, the development of a “prioritised Legislative Agenda and Implementation Action Plan”.
In April 2019, the Ministry of Finance had indicated that the components of the loan reflect the reality of the oil and gas sector on the economy. The emerging sector will also have environmental implications, as well as multiple direct and indirect impacts on local communities, “and that if poorly managed, the development of oil and gas resources can be economically and socially costly for the country,” the Finance Ministry acknowledged.
In an effort to comprehensively tackle the environmental and social issues stemming from Oil and Gas Sector, the government had committed to the execution of critical assessments, which will require effective and constant monitoring, coupled with significant investments in the environment, particularly in relation to damage prevention and response capacity.