- For instance, ‘Kazakhgate,’ a major corruption scandal in Kazakhstan, where a massive amount of money was paid to the President as payments to a presidential ‘secret fund’ to obtain a licence to explore petroleum in the Tengiz oilfield.
- See Michael Ross, ‘The Natural Resource Curse: How Wealth Can Make You Poor,’ in Ian Bannon and Paul Collier (eds), Natural Resources and Violent Conflict (The World Bank, Washington, DC, 2003), pp 17–42; Time for Transparency: Coming Clean on Oil, Mining and Gas Revenues, A Report by Global Witness (Washington, DC, March 2004).
- In Congo Brazzaville, one-third of government income goes to service oil-baked debt incurred by loans from private sources that are secured against future oil production. See Time for Transparency: Coming Clean on Oil, Mining and Gas Revenues, ibid.
- Congo Brazzaville and Equatorial Guinea are two examples where companies are accused of doing business with corrupt governments or are closely associated with government corruption.
- The resource curse theory is usually explained by the inverse relationship between resource abundance and economic growth. As a result of price volatility and price increases, the quality of public spending declines and the growth of other sectors of the economy, such as manufacturing and agriculture, declines as a result of the dependence on extractive revenues. See for detailed analysis of resource curse theory, Jeffrey D Sachs and Andrew M Warner, ‘Natural Resource Intensity and Economic Growth,’ in Jörg Mayer, Brian Chambers and Ayisha Farooq (eds), Development Policies in Natural Resource Economies (Cheltenham: Edward Elgar, 1999), pp 13–38; R M Auty (ed), Resource Abundance and Economic Development (Oxford: Oxford University Press, 2001); see also Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press 1997).
- See Modise D Modise, ‘Managing Mineral Revenues in Botswana,’ in Jörg Mayer, Brian Chambers and Ayisha Farooq (eds), Development Policies in Natural Resource Economies (Cheltenham: Edward Elgar, 1999), pp 78–97.
- See on the relationship between corruption and human rights violation in relation to deprivation of revenues from natural resources Andreanna M Truelove, Oil, Diamonds, and Sunlight: Fostering Human Rights Through Transparency in Revenues from Natural Resources’ (2003) 35 Georgetown Journal of International Law 207–237.
- Paul Collier and Anke Hoeffler, ‘Conflicts,’ in Bjorn Lomborg (ed), Global Crises, Global Solutions (Cambridge: Cambridge University Press, 2004), p 139; on oil and civil conflict, see also Toby Shelley, Oil: Politics, Poverty and the Planet (London: Zed Books, 2005) (who discusses civil conflict in Indonesia, Angola, Sudan, Colombia and Nigeria, where the impact of oil operation, inequitable distribution and corruption of the management of revenues have largely contributed to civil conflict and movement of secession), pp 55–69.
- Charles P McPherson, Petroleum Revenue Management in Developing Countries (Washington, DC: The World Bank).
- The EITI was launched by the UK Prime Minister, Tony Blair, at the World Summit on Sustainable Development, in Johannesburg, September 2002. See the Statement of Principles and Agreed Actions, www.eitransparency.org/principles.htm, last visited on 7 January 2006.
- See EITI: Country Implementation Updates, www.eitransparency.org/countryupdates.htm.
- Statement by Transparency International at High-Level Multi-Stakeholder Conference, 17 June 2003 on Extractive Industries Transparency Initiative (EITI), Berlin, see www.transparency.org/pressreleases_archive/2003/2003.06.17.statement_g8_re.
- Statement by Transparency International at High-Level Multi-Stakeholder Conference, 17 June 2003 on Extractive Industries Transparency Initiative (EITI), Berlin, see www.transparency.org/pressreleases_archive/2003/2003.06.17.statement_g8_re. Time For Transparency: Coming Clean on Oil, Mining and Gas Revenues, A Report by Global Witness (March 2004).
- See generally on the EITI, J Schumacher, ‘Introducing Transparency into the Oil Industry-The Quest for EITI,’ CEPMLP Internet Journal, Vol 15, Article 5.
- See www.publishwhatyoupay.org/english.
- www.publishwhatyoupay.org/english/objectives/index.shtml.
- See Emeka Duruigbo, ‘The World Bank, Muldnational Oil Corporations, and the Resource Curse in Africa’ (2005) 26 University of Pennsylvania Journal of International Economic Law 1, 51.
- International Initiatives to Promote Transparency, Human Rights Watch, www.hrw.org/reports/2004/angola0104/8.htm.
- See Bede Nwete, Revenue Transparency, National Sovereignty and Authoritative Government: Any Way Out of the Dilemma? Paper presented at the World Congress of Petroleum, held at Johannesburg, South Africa in September 2005.
- Oil Revenue Management Law, No 001/PR/99 (Chad).
- Ibid.
- Bank Information Center, Africa: Project, at www.bicusa.org/africa.htm.
- James C Owens, ‘Government Failures in Sub-Saharan Africa: The International Community's Option’ (2003) 43 Virginia Journal of International Law 1003, 1046.
- Gary and Nikki Reisch, Chad's Oil: Miracle or Mirage?Following the Money in Africa's Newest Petro-State, A Report of World Bank Information Center, 2005, www.bicusa.org/chadreport/index.php.
- ‘Chad: Oil Transparency Loopholes,’ AfricaFocus Bulletin, 20 February 2005, www.africafocus.org.docs05.oil0502.php.
- Jim Butler, ‘The World Bank Responds to the Extractive Industries Review-Sustainable Development Among Goals,’ 36 No 3 ABA Trends, pp 10, 11.
- World Bank press release No 2004/180/S, http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,contentMDK:20143509~menuPK:34463~pagePK:64003015~piPK:64003012~theSitePK:4607,00.html, last visited 17 January 2006.
- The draft guide is available at www.imf.org/external/np/fad/2004/grrt/eng/guide.pdf.
- The ROSC is a joint effort by the IMF and World Bank to summarise the extent to which a country observes certain internationally recognised standards and codes. ROCSs are prepared and published at the request of a World Bank or an IMF member country and countries are not under a formal obligation to request them. ROSCs have been prepared for Azerbaijan, Ghana, Iran, Kazakhstan and Papua New Guinea. See Philip Swanson, Mai Oldgard and Leiv Lunde, ‘Who Gets the Money? Reporting Resource Revenues,’ in Ian Bannon and Paul Collier (eds), Natural Resources and Violent Conflict (Washington, DC: The World Bank, 2003), p 60.
- Ibid, at 60.
- Ibid.
- Heike Mainhardt-Gibbs, ‘Revenue Transparency in the Extractive Industries: The Role of International Financial Institutions,’ The World Bank Information Center, Washington, DC, November 2004, p 6.
- Ibid.
- Treaty dated 21 February 2001 between the Federal Republic of Nigeria and the Democratic Republic of Säo Tomé and Príncipe on the Joint Development of Petroleum and Other Resources, In respect of Areas of the Exclusive Economic Zone of the Two States, Barrows Supplement (South and Central Africa) No 154, p 77.
- The Abuja Joint Declaration regarding Transparency and Governance in the Joint Development Zone, 26 June 2004. The Declaration is available at: www.nigeriasaotomejda.com/PDFs/Coal_Welc_Trans_com.pdf.
- Clause 30 on Transparency of Nigeria/Säo Tomé and Príncipe-Model Joint Development Authority PSC 2005, see Advisor, September 2005/No 258, Association of International Petroleum Negotiations.
- See Oil Revenue Law, Democratic Republic of Sào Tomé and Principe, adopted by National Assembly, and signed by President on 29 December 2004, Law No/2004. English and Portuguese copies of the law, Abujajoint Declaration and background information available at: www.earthinstitutecolumbia.edu/cgsd/STP/index_stp.htm.
- See Agreement on Wealth Sharing During the Pre-Interim and Interim Period, signed at Naivasha, Kenya on 7 January 2004. The agreement is available at: www.iss.co.za/AF/current/sudanwealth04.htm.
- Ibid, cl 3.0 of the agreement.
- The agreement provides for the establishment of an Oil Revenue Stabilisation Account and Future Generation Fund, a National Petroleum Commission and a Fiscal and Financial Allocation and Monitoring Commission. See ell 5, 6, 7, 8 and 12 of the agreement.
- See generally, Alan Gelb and Associates, Oil Windfalls: Blessing or Curse? (Oxford: Oxford University Press, 1988). The author deals with the impact on economic development of large windfall profits from oil shocks and absorption policy choices to manage the windfall profits for the wellbeing of the people.
- Emeka Duruigbo, n 17 above, at 3.
- Ibid, p 43.
- Ibid.
- See Marika Karayianni, ‘Production Sharing Agreements and National Oil Funds,’ in Shirin Akiner (ed), The Caspian: Politics, Energy and Security (London: RoutledgeCurzon 2004), pp 147–153.
- The State Oil Fund of the Republic of Azerbaijan was established in accordance with the Decree of the President of the Republic of Azerbaijan 240 dated 29 December 1999 ‘On establishment of the State Oil Fund of the Republic of Azerbaijan’. See www.oilfund.az/about.php. See also Willy Olsen, ‘The Role of Oil in the development of Azerbaijan,’ in Shirin Akiner (ed), The Caspian: Politics, Energy and Security (RoutledgeCurzon, London, 2004), pp 138–145.
- The main sources of income for SOFAR are:
- proceeds from the sale of the Republic of Azerbaijan's share of hydrocarbons;
- oil and gas agreement signatures and/or performance bonuses paid by investors to the state oil company or an authorised state body;
- acreage fees paid by foreign investors for use of the contract areas in connection with the development of hydrocarbon resources;
- dividend and profit participation revenues falling and the share of the Republic of the Azerbaijan in connection with the implementation of oil and gas agreements;
- revenues generated from oil and gas passing over the territory of Azerbaijan; and
- revenues from the management of SOFAR's assets. Revenues generated from the transfer of assets from investors to the state oil company or authorised state body, within the framework of oil and gas agreements: www.oilfund.az/about.php.
- Ibid
- www.oilfund.az/about.php.
- Ibid.
- Christian Peterson and Nina Budina, ‘Governance Framework of Oil Funds in Azerbaijan and Kazakhstan,’ presentation to the Workshop on Petroleum Revenue Management, World Bank, Washington, DC, 23–24 October.
- Svetlana Tsalik, ‘Caspian Oil Windfalls: Who Will Benefit?’ A Report of Caspian Revenue Watch, Open Society Institute, 2003.
- See Arts 6 and 8 of the Act.
- Jeffrey Davis, Rolando Ossowski, James Daniel and Steven Barnett, Oil Funds: Problems Posing as Solutions?’ Finance and Development 38 (4, December), available at www.imf.org/external/pubs/ft/fandd/2001/12/davis.htm.
- Ugo Fasano, ‘Review of the Experience with Oil Stabilisation and Savings Fund in Selected Countries,’ IMF Working Paper WP/00/112, International Monetary Fund, Washington, DC, June 2000.
- Philip Swanson, Mai Oldgard and Leiv Lunde, n 29 above, at 43–44.
- The Report of Mining, Minerals and Sustainable Development Project (London: Earthscan, 2002), p 194.
- Ibid.
- International Monetary Fund's Draft Guide on Resource Revenue Transparency, 15 December 2004, n 28 above.
- See Art 14 of the Law.
- Ibid.
- Philip Swanson, Mai Oldgard and Leiv Lunde, n 29 above, at 52.
- See cil 7.1 and 7.2 of the Agreement.
- See Ike Oguine, ‘Nigeria's Oil Revenues and the Oil Producing Areas’ (1999) 17JEHL 114.
- Examples of revenue sharing have recently been formulated including the ‘National Wealth Revenue Sharing’ programme of the Philippines, where 40 per cent of mining revenues are returned to regional and local areas. Also, in Peru, 20 per cent of income taxes collected from mining activities are distributed to regional and local governments, with regional governments getting 20 per cent of that share and 80 per cent of the share going to local governments. In addition, 40 per cent of claim taxes collected from mining activities in Peru are distributed to local governments. See Jennifer Cook Clark, ‘Law and Policy concerning Social and Cultural Issues in Mining,’ Mining and Environment Research Network Bulletin No 11 & 12, 1997, Special Edition, p 28.
- Article 252 (2) of the Constitution of Ghana. See S K Date-Bah, ‘Rights of Indigenous People in Relation to Natural Resources Development: An African's Perspective’ (1998) 16JERL 389. In 1992, the Government approved the establishment of an arrangement under which, independendy of the five per cent of total revenues referred to above, 20 per cent of all mineral royalties paid to the state by the mining companies is paid into a mineral development fund.
- Article 174 of the Oil and Gas Act 1998 (No 49 of 1998) (certified on 5 February 1999), Barrows supplement Asia and Australasia (Basic Oil Laws and Concession Contracts), No 146, p 113.
- The terms of the trust prescribes that at least 30 per cent of the net income of the trust fund shall be held on trust for future generations of project area landowners; and at least 30 per cent of the net income of the trust fund shall be utilised for the following purposes: (a) general health, welfare, education, and wellbeing of the project area landowners; (b) the provision or maintenance of community projects in the area of the petroleum project; and (c) any other purpose for the benefit of the project area landowners. Similarly, all grants made to the local governments and provincial governments shall be administered by a separate trustee, comprising in a majority of representatives of the state and in the minority of representatives of the Government. Expenditure of the fund by local and provincial governments shall be carried out by an Expenditure Implementation Committee, which shall be responsible for monitoring budgets and timetables for the construction and implementation of grant and benefit expenditure on behalf of the local governments and provincial governments. See Arts 170, 173, 175 of the Act.
- The Agreement provides for the establishment of Fiscal and Financial Allocation and Monetary Commission, which will be assigned duties and responsibilities of monitoring the transfer of the equalisation grant from the National Revenue Fund to respective levels of government, ensure appropriate utilisation of financial resources and transparency and fairness in the allocation of funds to the states/regions according to the established ratios or percentages stipulated in the Agreement. See cl 8 of the Agreement.
- Article 175 of the Oil and Gas Act 1998.
- J C Bell and T M Faria, ‘São Tomé and Príncipe Enacts Oil Revenue Law, Sets New Transparency, Accountability, and Governance Standards,’ Oil, Gas and Energy Law Intelligence, Vol 3, Issue 1, March 2005, see www.gasandoil.com/ogel/.
- ‘Iran's Model Service Contract of 1 January 2000 for Development between National Iranian Oil Corporations and Contractor, supplement (Middle East)’, No 152, pp 62, 97.
- Ivory Coast Foreign Corrupt Practices Agreement to PSC entered into 27 June 1992 between Ivory Coast and UMIC Ivory Coast Corporation and National Society of Petroleum Operation of Ivory Coast (Block Cl-11), Barrows supplement No 157 (South and Central Africa), p 123.
- The definition of oil revenues includes both direct source of income such as assets sales, indirect items such as dudes or custom fees and the net profits of any government-owned oil company. It also includes all revenue received by São Tomé and Principe from the Joint Development Zone. See n 72 above.
- See Report on ‘Beyond the rhetoric: measuring revenue transparency,’ Save the Children, UK, London, see website: www.savethechildren.org.uk.
- Ibid.
- Ibid.
- Philip Swanson, Mai Oldgard and Leiv Lunde, n 29 above, at 50.
- Under anti-bribery legislation in most OECD countries, stock market regulators already police a ‘books and records’ provision that requires companies to keep adequate details of their dealings with other entities and prohibits ‘off-the-books’ accounting. See ‘Time for Transparency: Coming Clean on Oil, Mining and Gas Revenues, A Report by Global Witness’, March 2004.
- See ‘EU Transparency Obligation Directive: European Parliament Takes Historic Step on Oil and Mining Transparency’, PWYPNewsletter (2nd edn, 2004).
- See www.dfid.gov.uk/pubs/files/eitidraftreporttransparency.pdf.
- Such transparency compact is followed by policy commitments of the G8 governments made in the meeting held in the Sea Island on June 2004, which adopted an Action Plan to implement commitments of Evian Summit of 2003.
- See for instance, ‘Compact to Promote Transparency and Combat Corruption: A New Partnership between the G8 and Nigeria’, Sea Island, lOJune 2004, www.g8.utoronto.ca/summit/nigeria.html.
- Cynthia A Williams, ‘Civil Society Initiatives and “Soft Law” in the Oil and Gas Industry’ (2004) 36 New York University Journal of International Law and Politics 457, 485.
- In Angola, BP's move to publish its payments to the Angolan Government was resisted by the government's threat to terminate the contract for violating the confidentiality clause in the petroleum contract.
Journal of Energy & Natural Resources Law
Volume 24, 2006 - Issue 1