Oil companies pad bills with “inflated and ineligible” costs
International organization Publish What You Pay (PWYP), has cautioned that countries should audit all bills submitted by oil companies. The entity’s call in this regard is based on its years of research which shows that “inflated and ineligible” costs are often part of an oil company’s bill more than 87 percent of the times.
Publish What You Pay is the world’s leading coalition of civil society organizations united in the call for a more transparent and accountable extractive sector. With more than 800 members, a global secretariat and 40 national coalitions that span the globe, PWYP has committed to working together to ensure that citizens have a say over whether their resources are extracted, how they are extracted and how their revenues are spent. The Canadabased organization noted in its latest report that inflating project costs reduces government revenue because it lowers net income upon which profit-based taxes are assessed. It stated that in some cases, costs claimed are simply ineligible. In extreme cases, which have occurred hundreds of times, false invoices are filed even when no work was actually done. The international organization said that Chile for example, was a major victim of false invoices by companies in the extractive sector. Publish What You Pay also noted that more commonly, claims are made for costs that should be excluded, but are often not caught by the relevant authorities. It said that case study evidence demonstrates that this includes companies seeking to claim expenses that: were incurred prior to the signing of the contract; were for the personal interests of expatriate employees and families; involved duplicate invoices for goods or services that have already been expensed; and which are clearly ineligible, such as costs related to mergers and acquisitions, or transfers in participating interests. The report said that oil companies have thoroughly abused Indonesia in this regard which led to that nation ultimately abandoning the use of Production Sharing Agreements and provisions for cost recovery.
(Kaieteurnews)