…must ensure good deals are made in the extractive sector –Int’l Consulting Agency
In the case of Norway, one is able to observe that oil and gas revenues can transform nations for the better. But there are other cases where countries have not been so fortunate.
It is on this premise that the Natural Resource Governance Institute (NRGI) believes that the parliamentarians must ensure strict oversight of the oil and gas sector. NRGI is an independent nonprofit organization dedicated to improving countries’ governance over their natural resources.
The Institute stressed in a parliamentary briefing that parliamentarians should also exercise their oversight role to ensure that good deals are made in the extractive sector.
NRGI said, “Through their oversight role, parliamentarians should ensure that all legislation affecting the fiscal elements of oil, gas and mining projects are coherent.
“Some countries have wrestled with inconsistencies between pieces of legislation. For example, mining laws and investment promotion laws might each spell out distinct incentives, which together may give away far too much or result in a lack of clarity as to which incentives apply.”
In the interest of transparency and accountability, the Organization noted that opposition parliamentarians should ask the government to provide revenue projections over the life of any major project— particularly when special fiscal exemptions or incentives are granted.
It also said that the Opposition MPs should request a detailed listing of all assumptions (prices, costs, etc.) upon which these projections are based.
The Institute asserted, “Over time, legislators should request regular reporting of revenues the state receives and compare them against these projections.”
NRGI stated, too, that there should also be a request for disclosure of all contracts with companies. It said that this is pertinent so that parliamentarians can access information about deals, including all the exemptions and incentives offered to companies that may deviate from those contained in generally applicable law.
It stressed that contract disclosure is essential for effective parliamentary oversight.
In another note to opposition parliamentarians, NRGI said that they should ask Government officials to explain the actions they take to ensure compliance with the fiscal regime, including conducting independent tax audits.
Local critics have also expressed the opinion that the oil and gas sector will require strong oversight from the parliament.
Chartered Accountant, Chris Ram, noted that the ExxonMobil agreement should have been tabled and approved in the National Assembly. He said that this should have been the way forward for all Production Sharing Agreements.
“These contracts have long term effects, so what you have is a Minister binding a Parliament or a country for decades. The practice of having Production Sharing Agreements go through the Parliamentary process can be seen in places like Tanzania, Ghana and Nigeria. That is how it should be done, because there are long term effects with these contracts…”
The Chartered Accountant said, “What we have before us is proof that this is what should be done. But in addition, I think even the scheme in which the Executive negotiates should be revised…”
Executive Member of the Working People’s Alliance (WPA), Dr. David Hinds is also in agreement with Ram’s points.
Dr. Hinds noted that the oil and gas sector is a defining one and as such, he would recommend that Parliament set up a standing committee on energy.
He said that such oversight is necessary, given how much is at stake. Perhaps as a start, the University Professor said, there should be a select committee to look at what has transpired thus far in relation to the contract and other related issues. He emphasized that such a committee should hold hearings, so that it gets to hear from government operatives and other expert witnesses.
Local commentators have also expressed concern over the lopsided deal Guyana signed with ExxonMobil, especially when it is compared with the agreement Exxon Mobil signed onto with the African country, Ghana.
The glaring disparities between the two contracts also underscore the need for the Guyana-ExxonMobil contract to be scrutinized by Parliament, critics say.
The Ghanaian contract has an entire section dedicated to procurement laws, which ExxonMobil must follow at all times. Those provisions are in place to ensure that a significant number of the local companies are able to benefit from the nation’s oil sector. On the other hand, Guyana’s contract mentions nothing about procurement laws.
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