CSR News - May 2012

Lack of transparency in Angola's oil revenues

 

In December 2011 the IMF discovered a massive $32-billion accounting gap in the accounts of the Angolan government for the years 2007-2010. The amount roughly equals a quarter of the country's total annual GDP. In other words, the Angolan government is unable to explain how it spent $32-billion - mostly revenues coming from the oil sector - which it collected between 2007 and 2010. The oil industry is the backbone of the economy, providing over 80% of government revenue and 50% of the GDP. Angola ranked 168th out of 182 countries in Transparency International's Corruption Perception Index in 2011. Due to the uneven and murky distribution of the oil revenues, many Angolans have to live in poverty - according to US government estimates, about 40% of the population lives below the poverty line - and the country ranks only 148th out of 187 countries in the United Nations Human Development Index.

 

In reaction to the accounting gap, civil society organisations urged the IMF to withhold the final $132.9-million disbursement of a $1.4-billion loan agreement made in 2009 until the Angolan government improved transparency on public funds. However, at the beginning of April the IMF nonetheless authorised the disbursement.

 

Furthermore, more than 150 Angolan civil society organisations and activists have written a letter to the US Securities and Exchange Commission (SEC) urging it to adopt strict implementing rules for Dodd-Franck Act. The SEC is mandated to produce the new regulations following the enactment of the law. A greater transparency in payments in the extractive industries sector is necessary to discover discrepancies like the ones in the Angolan accounts and is the first step needed to hold governments accountable.

 

Submissions of the Inter-Religious Council of Uganda on the Petroleum Bills

 

The Inter-Religious Council of Uganda (IRCU) presented a memorandum to the Natural Resources Committee of the Parliament of Uganda at the beginning of May 2012. They gave their recommendations concerning Bills addressing petroleum exploitation. The memorandum stated:

 

  • There is need for more transparency and accountability in the management of the oil sector.
  • Parliament should receive a greater oversight role.
  • The Petroleum Authority of Uganda has to become more independent and the ministers’ powers over the Authority have to be removed.
  • Licences should be granted by the Authority and not ministers. It should also refer to public procurement and disposal laws.
  • The bills do not include employee rights and protection.
  • Citizen participation should be increased through improved access to information concerning petroleum agreements.
  • The bills should focus more on people's rights to land.
  • The laws should address corporate responsibility for environmental damages.

 

Oil discovery in Kenya

 

In March 2012, Kenya became the second East African country, after Uganda, to have discovered oil. Kenya and its neighbours in east Africa, as well as the Horn, have become a hot spot for oil and gas exploration in recent years.

Tullow Oil, an Anglo/Irish company already investing in Uganda, discovered an oil well in Turkana County. The company said it plans to drill deeper and drill multiple other wells to seek more oil. Kenya already has a refinery, pipelines and other infrastructure.

 

Transparency norms discussed at the European Parliament

 

In April the European Parliament discussed for the first time the directives that would introduce, in the EU, transparency of payment regulations for extractive industries, similar to the US Dodd-Frank Act. Worryingly, both the European Peoples Party (EPP), the largest group in the European Parliament and the Liberals, the third largest group, showed sympathy for the industries’ push to water down the directives and to require reporting to be done just country by country, instead of project by project – the latter would lead to greater transparency. At the Council, this push is finding the support of some member states, in particular Germany and the United Kingdom.

 

Thomas Lazzeri/Sebastien Porter

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