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No reliable method to collect energy royalties -Trinidad's Auditor General




By Rosemarie Sant

Petroleumworld 06 15 2018

The Auditor General's Department told a Parliament's Public Accounts Committee that despite the country's stringent economic circumstances, it is in no position to assess “with any great deal of reliability,” the full amount of revenue currently being collected.

Deputy Auditor General Lorelly Pujadas, who is currently acting as the Auditor General, told the parliamentary committee that the problem “speaks to the method of gathering revenue data,” including the production data of oil companies.

This means, she said, that there is currently no method to collect the amount of royalties energy companies should be paying to the Ministry of Energy.

Responding to questions from Opposition Senator Tarhqa Obika, acting Auditor Executive Two, Brian Caesar told the committee on Wednesday that the ministry “still depend on the honour system, whereby oil and gas operators and quarry operators to submit production data and they do calculations of royalty based on what is submitted by the production companies.”

As a result, he said, “You cannot manage properly what is not measured,” and since the ministry is not doing proper measurement, we the Auditor General's department is “not in a position to determine the real revenue in terms of royalty that should be accrued to the ministry.”

Caesar said the Auditor General's department had asked the ministry to improve the system but to date there had been “no tangible changes.”

Pujadas said the ministry is seeking to develop an instrument “in which they will be able to better calibrate the data,” so that they will have more informed data coming forward.

But Obika declared that he was “mortified” with the response given the situation which the Minister of Finance finds himself in “at budget and mid-year review.”

He suggested the need for a recommendation from the Auditor General's department to the ministry in keeping with international best practice, to give the ministry “more teeth.”

According to Obika, industry practitioners “dissuade persons from measuring wells below certain volumes and even the reserves data is inadequate, the ministry does not have access to that,” he said, pointing out that there seemed to be “asymmetric information that is not in favour of the people of Trinidad and Tobago.”

Pujadas admitted to the Committee that the Auditor General's Department had been “deficient over the years, we have focused on the expenditure side,” but she said revenue had become critical because of the country's “stringent economic conditions,” and there was now a need to look at methodologies to get a “better sense of gaps in terms of revenue collection.”

Currently, she said, the way data is gathered there is no way to ascertain “whether or not all the VAT is being collected,” and whether those required to pay are doing so in a timely manner.

She suggested the need for the strengthening of internal audit at all ministries “as a department one would like to rely on internal audit to reduce our scope and not duplicate efforts,” but in order for that to happen, she added, “we need to ensure that the quality of work is of a standard and that the persons doing the work are qualified to do so.”

Pujadas also lobbied for implementation of the Integrated Financial Management System (INFIS) which, she said, had been spoken about ad nauseum.

“We need to go beyond talk and reach the stage where we implement,” she said.

Committee chair Dr Bhoe Tewarie explained that the system will allow senior officials including Permanent Secretaries and ministers to go online and know on a daily-basis “how money is being spent for recurrent and daily expenditure.” It was deemed as being “essential for good governance.”


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Story by Rosemarie Sant from Trinidad & Tobago Guardian
06 15 2018

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