Global Witness Identifies Lapses in Liberia’s Oil Sector

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Global Witness, a watchdog group for the world’s natural resources, says that while the Petroleum Act of Liberia may have some strength to make the expected oil profitable to citizens, there are still lapses that need to be corrected if it (oil) is to be of benefit to Liberians.

According to the group, there is no clear-cut definition of who constitutes a “beneficial owner” in the Act, and it fears that without a defined beneficial owner, companies could report that they are owned by holding companies or trusts.

“A definition stating that the beneficial owner or a company is, ‘the natural person (s) who directly or indirectly ultimately owns or controls the corporate entity’ could be used for the draft act,” Global Witness suggests.

Global Witness also observes that the act created by the National Oil Company (NOCAL) does not make any specific reference to the Liberian Extractive Industry Transparency Initiative (LEITI).

Furthermore, Global Witness says there is no requirement in the Petroleum Act to ensure that petroleum production data, export volumes, or prices that the oil will be sold for are published.

Even though the Section 15 of the Petroleum Act establishes strong pre-qualification requirements, Global Witness is of the view that more has to be done to set clear conditions that will identify specific issues.

Some of the conditions needed to spell out according to Global Witness, include a company’s human right records, treatment of employees, payment of tax, transparency record, anti-corruption measures, ethical procurement policy, corporate social responsibility, and involvement in legal infringements anywhere in the world.

A well-documented report compiled by Global Witness, a copy of which is in this paper’s possession, also underscores another weakness of the Petroleum Act and NOCAL Act — the power given the President to bypass competitive bidding procedures, awarding petroleum agreements on the basis of direct negotiations.

Moreover, Global Witness indicated in its findings that the NOCAL Act allows members of NOCAL’s board of directors to set the level of payments they are to receive as a stipend and per diem for travel outside of Liberia; something GW says would cause the board to allocate limitless amount.

The document further stresses that the draft Petroleum Act Section 51, which governs the acquisition of land fails to refer to or recognize customary land rights, leaving communities that have customary rather than formal land rights without clear legal protection should companies seek to acquire their land.

While under section 61.1 of the Petroleum Act holds the contractor liable for pollution damage even if the pollution were not the fault of the company, Global Witness observes that the act contains a narrow definition of pollution which could exclude oil, and oil companies would avoid responsibility for spills.

In its conclusion of the findings, Global Witness said success of the laws in developing a petroleum sector that would support Liberia’s economic development will in part, be determined by the safeguards within the Revenue Management Bill which has yet to be developed.

The concluding statement says strong transparency, oversight, and accountability provisions will be needed to ensure that any revenue from a potential oil find in Liberia can be effectively harnessed.

Global Witness urged members of the Legislature to honestly debate the issues and correct all lapses created in both the NOCAL and Petroleum Acts to create a good economic climate for Liberia when the exploration of oil in Liberia’s waters yields commercial quantity.

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