Remove shroud of secrecy from natural resource deals — Oxfam

Kenya's Energy and Petroleum Cabinet Secretary Charles Keter (right) with Tullow Oil vice-president for East Africa Gary Thompson after signing of the early oil export agreement. FILE PHOTO | DIANA NGILA 

In Summary

• Oxfam has renewed the push for full disclosure of contracts to tame corruption and guarantee benefits to the wider society.
• Oxfam contends that citizens have a right to know the full terms under which oil, gas and mineral resources are developed and sold.
• Kenya, Tanzania and Uganda governments have remained secretive on contracts entered into with foreign firms, which has fuelled suspicion on the actual beneficiaries of oil, gas and minerals revenues.

By NJIRAINI MUCHIRA
More by this Author

As East Africa becomes a hub of oil, gas and minerals discoveries, which has seen global companies enter the region in droves, Oxfam has renewed the push for full disclosure of contracts to tame corruption and guarantee benefits to the wider society.

However, the fact that only a few government officials know the details of contracts signed with foreign companies operating in the region is causing worries that corruption could be deeply entrenched in the extractive sector.

In its Contract Disclosure Survey 2018, Oxfam contends that citizens have a right to know the full terms under which oil, gas and mineral resources are developed and sold under contracts that are entered between government and multinational companies and their local partners.

“Secrecy about contracts fuels public suspicion and empowers corrupt officials. It also undermines oversight and enforcement by regulators, parliaments and advocates of good governance,” states the report launched in Nairobi last Thursday.

It adds that full disclosure is necessary for any contract, concession, production-sharing agreement or other agreement that governs the licensing, exploration, production and distribution of oil, gas and mineral resources.

The NGO says that oil, gas and mining projects should contribute to poverty reduction and not corruption, conflict and human rights abuses.

Related Content

• Kenya mineral survey to boost gains
• Kenya to create special fund for mining royalties
• Kenya, TZ mining reforms earn them poor investor ratings
• Global mining firms sue Kenya for $3.2 billion compensation

Isabel Munilla, author and policy lead for extractive industries transparency at Oxfam America, said that although the estimated oil, gas and mineral rents totalled $1.7 trillion globally in 2015 only a small number of people have had access to the terms to which extractives projects are bound despite the corruption risks.

Citizen participation

“Oil, gas and mineral rents totalled $1.7 trillion in 2015 — more than the total GDP of the world’s poorest countries — and these deals can influence a country’s development trajectory for generations. However, only a small number of people know about the terms of engagement of these projects,” she said.

“Contract disclosure is a well-established strategy to address these risks but the extractives industry is still lagging behind the global norms,” Ms Munilla added.

In Kenya, where discovery of vast deposits of crude oil by British firm Tullow Oil has the country on the verge of a petrodollar boom, the government has remained guarded on the details of production sharing contracts signed between the two parties.

While Tullow has been on record that it has no objection to public disclosure of the contracts, the government has maintained there is no legal requirement to disclose the details.
Kenya is, however, seeking to introduce transparency in the contracts after the Petroleum (Exploration, Development and Production) Bill, 2017 that is currently in Parliament classifies the contracts as public documents, meaning the government is obligated to make them available to the public.

The Tanzanian and Ugandan governments have also remained secretive on contracts entered into with foreign firms, which has fuelled suspicion on the actual beneficiaries of oil, gas and minerals revenues.

According to the Oxfam survey, although the Extractive Industries Transparency Initiative, a global standard for the good governance of oil, gas and mineral resources, has made major strides in propagating for contracts disclosure, many companies still believe in secrecy.

It adds that countries that have refused to embrace transparency have failed to realise the benefits which include undermining the drivers of unfair deals, attracting high-quality investments, incentivising more sophisticated policy development and allowing for greater citizen participation in the governance of the extractive industry.