Terms of Reference
- Background
As Guyana moves into a new chapter of history as an emerging petroleum producing nation, sustainable development lies at the core of the Government of Guyana’s goals for the sector. Being keenly aware that petroleum is a non-renewable resource, considerations related to its extraction and conversion into financial capital highlight the requirement and responsibility to ensure that the resource is prudently managed, from the time petroleum ‘appears’ at the wellhead, for the long lasting benefit of Guyana. In developing the policies, legal framework, institutions and systems to oversee and manage the sector, the Government of Guyana is committed to ensuring that this framework allows both present and future generations to reap the benefits.
Guyana’s petroleum sector is progressing swiftly with first oil expected in 2020. This planned petroleum development, coupled with ongoing assessment of new discoveries, has led the Government of Guyana to focus on ramping up preparations to oversee the upstream sector (exploration, development and production); to develop policy and legislation, to build up internal capacity building, to promote governance and transparency, and to undertake financial and economic planning.
The proposed Guyana Oil and Gas Capacity Building Project (the ‘Project’) is supported by the World Bank and aims to enhance the Government’s capacity to achieve its management goals for the petroleum sector through interventions focused on enhancing legal and institutional frameworks and strengthening the capacity of key institutions to manage the oil and gas sector in Guyana.
- Objective
The objective of the assignment is to conduct an audit of the Recoverable Contract Costs as called for in the signed Production Sharing Contract(s), taking into consideration best practices in International Accounting Standards as well as Auditing Procedures and Standards. In addition, provide on-the-job training to the staff of the Guyana Revenue Authority (GRA) and the Office of the Auditor General (OAG) on cost recovery auditing, with a particular focus on value for money.
- Scope of Work
Under the present Terms of Reference, the Consultant is invited to fulfill the scope of works described below:
- Pursuant to the Government’s audit rights contained in the Petroleum Sharing Agreement, the Consultant, working together with a designated joint GRA/OAG team, coordinated by the Department of Energy (DoE), will audit, examine and verify all available documentation and records necessary for charges and credits relating to the Contractor’s[1] activities under the Petroleum Sharing Agreement – all books of accounts, accounting entries, material records and inventories, vouchers, payrolls, invoices and any other documents, correspondence – and determine if any required documents are yet to be submitted.
- Applying the terms of the Petroleum Sharing Agreement and any relevant legislation, best practice of International Accounting Standards as well as Auditing Procedures & Standards the Consultant will examine the Contract Costs submitted by the Contractor to determine:
- If Contract Costs have been properly assigned to the correct cost category, in the correct amount and with adequate transparency level;
- If Contract costs are eligibility for cost recovery (including determining the fiscal year of incurred expenses and consequences for potential future uplift); and
- If, in the opinion of the Consultant, costs submitted by the Contractor have been incorrectly categorized and/or should be disqualified from Cost Recovery, the Consultant should clearly state the basis for the exception.
- Assist the relevant authorities in communicating the findings of the audit to the Contractor and, if requested, represent or accompany the relevant authorities in meetings with the Contractor.
- Assess the impact of the audit on future Profit Oil and Profit Gas, its subsequent petroleum tax implications and if relevant tax entitlements are optimized in the interest of the Government of Guyana.
- Provide on-the-job training to the staff of the Guyana Revenue Authority (GRA), Office of the Auditor General (OAG) as they are working jointly with the Consultant and other agencies aimed at building the capacity of these agencies to:
- Understand the methodology applied in conducting the audit
- Interpret the findings of the audit
- Communicate findings to the Contractor
- Manage future audits
- Duration of Assignment
The duration of this assignment is expected to be four (4) months, with an option to renew on expiration, commencing December 2018. The Consultant’s physical presence will be required by the Client.
The consultant is requested to present its proposal with a timeline allocation for the assignment and any assumptions made regarding the level of effort indicated in this TOR.
The contract will be lump sum based and the selected Consultant will be required to complete the work for the amount of their proposal.
The Consultant’s work will be coordinated by the Department of Energy. The Department of Energy team will provide existing documentation regarding the assignment and facilitate the exchange of information between the Consultant and the Contractor. The Consultant will be responsible for obtaining all the necessary public information required to perform the tasks included in these TOR.
The core deliverables for this assignment are the provision of advice and assistance to the Client as required in executing the Scope of Work. These advisory services shall be carried out with a participatory approach and involve counterpart staff in all stages of the activities. In addition, the Consultant will be required to prepare and deliver:
- Initial Audit Findings
- Intermediate Audit Report and Recommendation
- Final Audit Report and Recommendations
- Account of the Audit Process (particular focus on lessons learned and recommendations to the Government of Guyana)
The timing of deliverables is to be agreed upfront with the Department of Energy. All deliverables shall have to comply with the deadlines established.
The Consultant will together with the Department of Energy organize a one-day workshop for GRA/OAG within 5 days following the submission of the intermediate and the final audit reports. In addition, the Consultant will be expected to prepare responses in writing, as needed, to queries from GRA/OAG.
All deliverables in electronic and printed copies will be required in English and will be submitted to the Department of Energy and GRA/OAG for review and approval. It is expected that certain deliverables may require several drafts to incorporate comments by the World Bank, the Client, and relevant stakeholders before they are determined to be final.
- Expected Experience and required qualifications
To be eligible for the assignment, the Consultant should be an internationally-recognized accounting and audit firm with extensive experience in contract compliance review, joint venture audits, auditing petroleum costs under production sharing contracts and other petroleum agreements and its fiscal implications with at least three (3) projects in auditing International Oil Companies.
The Consultant may propose the best team combination to achieve the overall goal. To be considered for the assignment, proposed team members should have in-depth international expertise, local and regional knowledge, access to benchmarking for comparable deep-water environments and the following minimum qualifications (though consultants are invited to propose further skills as deemed appropriate for meeting the needs of the assignment):
6.1. Team leader
The team leader should have a Degree in Accounting, Business, or other relevant degree with between 20-25 years’ experience.
The team leader should demonstrate experience in the following areas: auditing oil and gas costs for cost recovery eligibility; oil and gas field design; engineering and cost estimation; experience with cost estimating tools/software; experience in developing, reviewing Development Plans and cost estimates (facilities and infrastructure); development of cost models in upstream infrastructure development.
The team leader should have a track record of team leadership with demonstration of experience working with versatile teams and excellent planning, organizational and communication skills with the ability to guide multi-disciplinary teams.
6.2. Petroleum Engineer
Should have a degree in Petroleum Engineering, Engineering, or other relevant discipline with the following experience: in cost Optimization through improved CAPEX and OPEX discipline; in upstream cost study in Cost Modeling and Benchmarking Field design, engineering and cost optimization CAPEX/OPEX analysis and bench-marking; understanding of upstream value chain; exploration activities and costs component, and experience in regional (Latin America) Exploration and Production.
6.3. Financial Expert
Should have a degree in Finance, Management or Business related discipline with over 10 years’ experience in upstream oil and gas companies with the following relevant experience: production sharing contracts and their fiscal terms; joint venture operations; cost classifications and categorization; international procurement and procurement benchmarks; budgets and analysis of Financial Statements and cost schedules; cost allocations, taxation, transfer pricing; financial and economic modeling in upstream petroleum; different type of models and software’s, and understanding of IFRS and other accounting standards.
6.4. Legal Expert
Should have a degree in Law with over 10 year’s experience working in upstream oil and gas companies. Should be conversant with all legislation including tax laws and the petroleum law governing the upstream sector in Guyana since they will determine the cost allowability
In addition, the expert should have the following relevant experience: interpretation of relevant Petroleum Laws; Experience in Production Sharing Contracts; Joint Venture Operations; Upstream Agreements and Negotiations; and local content policies.
To be considered for the assignment, proposed team members should submit their respective CV’s. The key members of the Consultant’s team shall not change throughout the duration of the contract with the Government of Guyana. Any staff changes will require the Government of Guyana’s approval. The Consultant’s recommendations must be consistent with the World Bank’s safeguard policies.
- Conflict of Interest
The Consultant is required to disclose any potential conflicts of interest arising out of other assignments. Where the Consultant currently represents any party or potential stakeholders that would create conflict of interest or to the extent any conflict of interest would arise in the future, the Consultant shall detail any measures that may be required to avoid conflicts of interest in connection with the implementation of this assignment.
- Confidentiality
The Consultant shall be required to keep confidential all information received, gathered or communicated, directly or indirectly, from relevant authorities, agencies, ministries, the World Bank or other stakeholders as well as all copies or analyses that the Consultant has made, or that have been made by third parties, on the basis of such information (collectively, the Material). The Consultant shall use the Material exclusively for the purpose of providing the services described in these Terms of Reference. The confidentiality obligations shall not apply to information in the public domain.
All reports and work products from the Consultant will be only delivered to specifically designated representatives within the government of Guyana.
[1] The Contractor will be determined by the Client.
