Think Africa Press – Why Changing Congo’s Proposed Oil Legislation Should Be Top of the Bill – Transparency, Virunga, Future Generations!

Oil legislation proposed in Democratic Republic of Congo could facilitate future corruption and lead to environmental damage in one of Africa’s most diverse and fragile national parks.

Article | 24 September 2013 – 3:52pm | By Jamie Pickering

A controversial hydrocarbons bill, concerning the management of planned oil production expansion in the Democratic Republic of Congo, has already passed the Congolese senate and is set to be discussed in the parliamentary session which began on Sunday, September 15. For the country that has the lowest GDP per capita in the world and where 7 million children do not go to school, increased oil production presents an opportunity for economic development. However, there are concerns that the bill’s poor drafting will facilitate corruption and could leave the Congo’s fledgling oil industry open to abuses, whilst some opponents of the proposed legislation are aghast that it would allow drilling in Virunga National Park, a UNESCO world heritage site.

Global Witness has called upon the Congolese Parliament to stall the bill, allowing time for further consultation. They believe the bill in its current state is not fit for purpose and requires a lot of improvement.

Congolese Hydrocarbons Minister, Crispin Atama Tabe, has defended the proposed legislation, claiming that the current draft will prevent corruption and ensure transparency in future oil dealings. He has previously stated that “In our code we’ve integrated the principle of the tender for all hydrocarbons rights purchases”, meaning that the details of deal making should be made public. He continues, “The ministry will also open a website, so that all the different contracts will be immediately and systematically published.”

As transparent as oil

However, Nathaniel Dyer, from Global Witness, does not think that the bill provides even the most basic safeguards. He says, in conversation with Think Africa Press, that “There is nothing currently in the bill that will prevent risk of corruption or environmental damage in the future. Crispin Atama, has said that there will be an open tendering process, but if you actually look at the law it is a really weak, opaque process, with very little information getting in the public domain.”

Dyer believes some of the problems with the bill are due to a lack of expertise on the part of those who have been drafting it. However, he also thinks there are some interests which are complicit in keeping the bill vague and open to corruption.

“I think it was a deliberate decision not to include some of the basic transparency terms. There is already a Prime Ministerial Decree from May 2011 that any natural resource contract needs to be published 60 days after its been signed. We want to see that language from the decree actually goes into the law, because a decree can be easily revoked by a minister, but if it is in the law this clause is anchored in.”

On top of this desired alteration, Global Witness have called for an open tender process for the allocation of oil rights, the publication of the names of the ultimate owners or beneficiaries of these rights and the deletion of the controversial article in the oil bill that would pave the way for drilling in Congo’s Virunga National Park.

Plans for drilling in Virunga

Virunga National Park spans 7,900 square km, an area three times the size of Luxembourg. It is known for its exceptional biodiversity and is a celebrated UNESCO World Heritage Site. SOCO International, a London-based company and the owner of the ‘Block-5’ oil concession, which includes large parts of the park, plans to drill there, despite both local and international opposition, including from the UK government. SOCO have defended their desire to extract oil from Virunga in a press release, stating that “SOCO believes that our presence in and near the Virunga National Park can support the on-going conservation efforts. A responsibly managed project can bring a measure of stability to a region even in the short term.”

However, opponents of oil exploration in the park, such as the Save Virunga organisation, strongly disagree. They believe drilling will scar the environment and pose a direct threat to the habitats of many animals, including the endangered silverback mountain gorilla.

Many are also worried that oil drilling will result in environmental damage that could be devastating for people in the region. Raymond Lumbuenamo, of the World Wildlife Foundation DRC, has previously claimed that “Two million people’s livelihoods depend one way or the other on the park and the surrounding ecosystem, and there could be disastrous consequences of oil extraction in what is already a very fragile area.”

Beyond Virunga

The bill’s implications for future Congolese oil extraction goes beyond the Virunga National Park. DRC recently struck an agreement with Angola concerning offshore oil and there is on-going oil exploration in other regions of the country. Many believe that getting this new oil legislation right is essential for preventing future drilling from becoming another Congolese resource curse.

Congo has a dire record concerning the responsible extraction of natural resources. Since King Leopold of Belgium plundered the country for rubber in the 19th century, the proceeds of the natural wealth of DRC have not been to the benefit of local populations, but have instead been stolen, embezzled and fought over by rival groups. Throughout its recent history, Congo’s endowment of resources has not encouraged development, but conflict and corruption.

The Africa Progress Panel released a report earlier this year describing some of the most recent natural resource abuses in the Congo. The report revealed that in just five separate mining deals between 2010 and 2012, the DRC lost at least $1.36 billion in revenues from the under-pricing of mining assets. As the report points out, this sum amounts to almost double the country’s combined budget in 2012 for health and education. So whilst well-connected government officials receive generous kickbacks and in return the mining companies benefit from purchasing grossly underpriced assets, state coffers suffer.

Although Caroline Kende-Robb, executive director of the Africa Progress Panel, stresses that only a minority of natural resource companies operate in this corrupt manner, she explains to Think Africa Press that the problem is that “There still are companies that will go in and cut deals with very high-level government officials. They will invest a small amount of money and then they will make a lot of money when they sell off all the concessions, through shell companies and very complex structures.”

Preventing history from repeating itself

Many therefore see it as essential that there is adequate legislation in place to help prevent abuses in mining from being replicated in the oil sector. Congolese civil society groups published a document in April earlier this year seen by Global Witness, entitled ‘Les Organisations De La Societe Civile Impliquees Dans Les Questions Des Ressources Naturelles’ [Organisations of Civil Society Involved in Questions of Natural Resources], recommending that, amongst other alterations, the hydrocarbon law be revised to emulate successful legislation in other countries. The document states that “The civil society organisations have also proposed to adapt the provisions of the hydrocarbon law with the laws of other countries or to use the provisions of petroleum hydrocarbons codes of other African countries [author’s translation].”

Dyer supports this proposal. He believes that “Congo can definitely learn from other countries, such as Botswana and Ghana. For example, there was a South Sudanese oil code passed last year with lots of positive elements in it, such as beneficial ownership and publication of contracts. There are other African countries with great laws on the books, even if they aren’t always followed.”

His final words highlight one key problem: there is concern that even if the oil bill is altered to include recommended best practices, this doesn’t necessarily mean the legislation will ensure that oil revenues will actually benefit the Congolese population.

However, Kende-Robb insists that reform of the bill is still fundamental in ensuring that future oil extraction is well-managed. She stresses that the bill requires stronger stipulations for the details of deals with oil companies to be clearly and openly published because, “If at least there is something in the public domain then that is a huge starting point. Countries that have more information in the public domain tend to eventually be more transparent, because you have a public dialogue and the people can hold the government to account, to a certain extent. In some countries that is easier than others, and in the DRC that is particularly difficult. But improving the bill has to be a step in the right direction.”

A fragile opportunity

Expansion of Congolese oil production could be a massive opportunity for DRC and its population, creating opportunities for development, jobs and improving the country’s currently meagre infrastructure, but Dyer stresses that this opportunity needs to be correctly managed and potential abuses safeguarded against. He states that “Crispin Atama has gone on record saying that he would like oil production to increase from 25,000 barrels per day to 225,000 – this is almost ten times its current production. If the Congolese government keep the same ratio of taxes and royalties then you are looking at around $3 billion extra per year, which is a huge amount, considering that the entire budget of Congo is about $8 billion.”

He believes that getting the proposed oil bill right is absolutely essential because “This is a once-in-a generation opportunity for Congo to relieve some of its problems.”

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