Parliament must not rush through but do a thorough job on the Petroleum Exploration and Production (E&P) Bill and ensure it guarantees open and competitive bidding for oil blocks as well as mandatory disclosure of oil contracts and beneficial owners, Civil Society Organisations have said.
Parliament last week invited memoranda from the public as it considers the long-in-coming law that will govern upstream petroleum activities.
The CSOs have responded by issuing a memo, which calls on the law-making body to among other things ensure the law provides clear conditions under which the sector minister can resort to direct negotiations instead of a public tender.
Although the E&P bill provides for an open and competitive bidding process for oil blocks, it also allows the sector minister to ignore the outcome of an open and competitive tender process and go into direct negotiations with a company.
This, the CSOs argue, could undermine the whole essence of the open and competitive bidding provision in the law; and they say it is tantamount to ‘giving with one hand and taking with the other’.
“We are asking parliament to revisit this particular provision and ensure the bill provides conditions and circumstances under which the minister may resort to direct negation,” said Augustine Niber of the Centre for Public Interest Law, who read the CSO memo.
“Direct negotiations should be entered into only when all competitive processes are exhausted. It would be appropriate to adopt the Angolan and Kenyan models rather than the “efficiency criteria” provided for in the bill,” he said.
In Angola, the minister is allowed to go ahead with direct negotiations only when no other company shows interest in the area in question after fifteen days of a public notice. Kenya has increased the waiting period to 30 days in its own petroleum bill.
The CSOs are equally asking law-makers to strike out the clause that leaves the disclosure of oil contracts and beneficial owners to the discretion of the sector minister, and make it mandatory.
Out of some twenty one oil contracts signed between government and various oil companies, only seven are said to have been made public. This, the CSOs believe, is because the law does not make disclosure mandatory.
Although the bill provides for a public register of contracts, the CSOs say the register may only provide a list of the contracts but not the material primary contracts.
“The contents of the public register as provided for in the bill exclude important disclosures of public interest, which are necessary to prevent rent-seeking behaviour and corruption in the oil and gas industry,” said Dr. Mohammed Amin Adam of the Africa Centre for Energy Policy.
“The Public Register of Contracts must cover disclosure of primary Petroleum Agreements and sub-contracts, beneficial ownership information in Petroleum Agreements and sub-contracts, petroleum-related assets of the state, justifications for granting Petroleum Agreements, Marketing Agreements related to sales of the state’s share of petroleum, the audited accounts of national oil companies; and a list of beneficiaries from the Local Content Fund,” the CSOs demanded.
They further stated thus: “The duration of a Petroleum Agreement for oil should be different from an Agreement for Gas. We further recommend that the duration for a Gas Commercial Agreement should be 30 years while oil should be 25 years.
“In this bill the proposal for extending the duration of a Petroleum Agreement applies in clause 29, when the Minister postpones the development of an area. This provides incentive and protection for the investor and should be encouraged.”