Every Man, Woman and Child in Guyana Must Become Oil-Minded Part 25

Kudos, Cabinet

Notwithstanding its extreme reluctance to release the contract signed by Natural Resources Minister Raphael Trotman with Esso Exploration and Production (Guyana) Limited and two Joint Partners some eighteen months ago, Cabinet deserves credit for its decision to make the contract public in December. All the more because we are told that experts had advised Trotman that it would be a breach of the law for the Government to do so. I am sure that the Government will not regret this decision as there really is nothing to lose. In fact, Guyana will be joining a growing list of countries which make their extractive contracts and licences public.

The Executive Summary of a report Past the Tipping Point? published earlier this year by Natural Resource Governance Institute and written by Don Hubert and Rob Pitman concluded that it is becoming increasingly normal for member countries of the Extractive Industries Transparency Initiative (EITI) to disclose the contracts and licenses that lay out the terms for resource exploitation. No doubt, Guyana, which was recently admitted to membership of EITI, will be much more comfortable at EITI meetings when the question of contract disclosure is being discussed. In fact, Guyana will be joining a group of eleven countries which discloses its contracts despite having no statutory obligation to do so.

A positive trend

What is more heartening is that only two of the eleven – the USA and the UK are western countries. Two are Eastern European countries, four are from Africa, one from South America, one from Asia and one from Eurasia. Three African countries – Central African Republic, Côte d’Ivoire and Tanzania – which have a legal obligation to disclose fail to do so. There are twenty countries which have no legal obligation to disclose and which do not disclose. Among these are Norway, (yes Norway, Germany and Trinidad and Tobago. In total, of the fifty-one countries covered by the review, twenty-nine, i.e. well over half, disclose at least some of these agreements, while several more are taking concrete steps to join their ranks.

There were an additional ten governments not selected for study, but which are also disclosing, bringing the global figure to an impressive thirty-nine countries. While Guyana’s interest in extractive industry (EI) disclosures has been piqued by petroleum contracts, the review covered not only petroleum countries but mining companies as well. The review opined that the decision to disclose contracts or licenses demonstrates that governments and companies are increasingly finding that the benefits of contract transparency outweigh restrictive confidentiality concerns surrounding commercial sensitivity, trade secrets or intellectual property.

The review also found that the number of countries that have passed laws requiring contract disclosure has also increased. When Hubert and Pitman did a chronological analysis of the dates of the enactment of law or the adoption of policies requiring disclosure, they found that since 2008, the number of countries with laws/policies has more than tripled. These statistics confound the advice of the legal experts who told Minister Trotman that Guyana could not disclose its contracts. While my support for EITI is not unqualified, it does appear that the organisation deserves credit for this trend. Since 2013, the EITI Standard has included a provision on contracts that encourages public disclosure of contracts (section 2.4). In the period since that change, nine new EITI countries have released contracts, and nine have enacted laws that require contract disclosure.

Sharing the credit

But credit is also due to international bodies such as Amnesty International, which highlighted the importance of transparency in combatting corruption risks related to the Chad-Cameroon and Baku-Tbilisi-Ceyhan pipelines. In 2009, the NRGI study Contracts Confidential analyzed and challenged the legal foundation for contract secrecy. The IMF has also played its part in its widely circulated Guide on Resource Revenue Transparency which advocated for disclosure and transparency. In 2011, the International Bar Association released a model mining development agreement that included a provision noting that contracts produced using the model should become public documents while in 2012, the World Bank Group’s private sector lending arm – added a financing requirement that IFC-backed oil, gas and mining projects disclose the “principal contract with government that sets out the key terms and conditions under which a resource will be exploited.” The European Bank for Reconstruction and Development established similar requirements for hydrocarbon projects in 2013.

Despite not being in the top tier of the EI countries in resource management, my favourite example is Ghana – a relative newcomer to the business- which is not only required to get parliamentary approval for its oil contracts but whose Government has now included an anti-bribery provision in new Petroleum Agreements (PAs) submitted to Parliament for approval.

But this does not mean that everywhere in the extractive industries world, everything is fine and that the efforts to promote transparency are bearing fruit. Nigeria and Angola are considered poster children for the hold out states where the majority of their citizens are yet to benefit from their countries substantial reserves of petroleum.

Once again, kudos Guyana.

Around the Web