I write in response to the letter by the Honourable Prime Minister (`The Guyana Energy Agency is being reasonably well run published in SN of September 14, 2013’), which he said was written out of ”a need and a duty to set the record straight, [and] dispel any erroneous concerns and doubts” created about the Guyana Energy Agency (GEA). There are several points in the letter on which the Prime Minister and presumably the officials of the GEA and NICIL who advise him, are simply incorrect:
1. Mr. Hinds states that the GEA “is in compliance with all of the relevant reporting requirements, which include the Companies Act of Guyana and the International Financial Reporting Standards.” The Companies Act is not relevant to GEA. It applies to companies incorporated or registered, or continued under it, not to statutory bodies. The Fiscal Management and Accountability Act 2003 (FMAA) makes the GEA a statutory body, period.
2. Mr. Hinds should have exercised caution in his categorical reference to International Financial Reporting Standards (IFRS). Paragraph 8 of International Accounting Standard 18 Revenue lays down the rule for revenue recognition by principals and agents. In essence, the rule is that revenue can only include the gross inflows of economic benefits received and receivable by the entity on its own account and not as an agent of a principal. Under this Standard, amounts collected on behalf of a principal are not revenue of the collector or agent. I respectfully remind Mr. Hinds of the announcement by Finance Minister Dr. Ashni Singh at paragraph 4.11 of the 2007 Budget Speech that the Government of Guyana had “recently signed the PetroCaribe bilateral agreement with Venezuela.” GEA is merely carrying out the transactions on behalf of the State and pays out the money from the sale of the petroleum to Venezuela and the Ministry of Finance in Guyana. It is an agent, not a principal.
3. Mr. Hinds compounds the error identified in the preceding paragraph by an apparent failure to read the source of the articles on which he sought to “set the record straight” (chrisram.net). Had he done so he would have noticed that I had written that GEA treats as “income the moneys it receives from the oil companies … and then shows the related payments to PDVSA and the Ministry of Finance as Office and Administration Cost!” Even if the people at the GEA and the Auditor General do not know about IFRS, they should at least know that sales must be matched with cost of sales.
4. Similarly, Mr. Hinds stated that I did not disclose that I was provided with a summary of the works and the draft Strategic Plan of the GEA. On the contrary, in the same blog article on chrisram.net I acknowledged and quoted from both documents! In any case, it is not about providing any individual with information: it is about tabling the required documents in the National Assembly.
5. Mr. Hinds then asserts that “concerning whether an Annual Report, or just an Audited Financial Statement, is to be tabled in the National Assembly, we maintain that Section 30 of the Guyana Energy Agency Act speaks to Audited Financial Statements.” This shows unfamiliarity with section 80 of the FMAA which requires every statutory body to file, no later than four months after the end of the body’s fiscal year, an annual report and audited financial statements. The concerned Minister – in this case Mr. Hinds – has two months to present the annual report, including the audited financial statements, to the National Assembly. Mr. Hinds who is Leader of the House is in breach of his statutory duty to the National Assembly.
6. In seeking to rebut my statement about gaps in GEA’s governance as it concerns the appointment of directors, Mr. Hinds states that “our HPS (presumably Dr. Luncheon) reads out those names at his regular post-cabinet meeting press briefings.” I respectfully refer Mr. Hinds to section 27 of the Guyana Energy Agency Act which requires the names of all members of the Board and all subsequent changes to be published in the Gazette.
This response to Prime Minister Hinds’ letter is intended neither to expose nor embarrass. Rather it speaks to weaknesses in the energy sector, including the Guyana Energy Authority and involving the Prime Minister, the CEO of the GEA and NICIL. The collective failure of the Prime Minister and the heads of these entities to understand and discharge their duties, functions and responsibilities cannot be afforded or tolerated by a country as poor as Guyana.
Unlike Mr. Hinds, I do not wish I was doing something else but rather am thankful for the opportunity to share any ideas and experiences I have. I hope that not only he but all directors and officers of statutory bodies, and indeed Ministers with specific statutory responsibilities to report to the National Assembly, will start informing themselves of their functions, duties and obligations.
I would respectfully recommend that the Government arrange for a seminar or seminars for Ministers, MPs and state officials to be led by a management specialist, an attorney and an accountant of its choice. That could go a long way to enhance efficiency and compliance with relevant laws.