For many years, the oil and gas industry in West Africa has been tainted by its association with corruption, a problem that has been particularly manifest in the region’s largest hydrocarbon producing economies, including Nigeria, Angola and Ghana.
However, in recent times, there appears to have been a shift in attitude among the governing classes of these countries, and an encouraging recognition of the need for transparency, not only to reduce corruption but also to stimulate foreign investment, encourage financial independence and gain wider public trust.
Nigeria
Nigeria was only the second country to comply with the UK-led Extractive Industries Transparency Initiative (EITI), and has received widespread commendation for its new audit report on payments in the oil and gas industry.
Clare Short, the chair of EITI, admits that the “analysis done by Nigeria is very impressive”. Nigeria now has a number of anti-corruption agencies in place, including the Independent Corrupt Practices and Other Related Offences Commission (ICPC), which has carried a series of investigations. In 2011, Nigeria passed a new Freedom of Information Bill into law.
More recently, in May this year, this country received an EITI chairman’s award for showing leadership, determination, resourcefulness and going beyond the minimum standards of transparency in influencing country policy. It does seem Nigeria may finally be turning the corner in the war on corruption.
Problems do remain, of course. Critics point to the fact that despite the arrival of these new high profile agencies, to date only a few high-ranking politicians have been charged with corruption offences. The jury is, therefore, still out as to whether this process is bringing real, tangible progress.
Meanwhile, the problem of widespread oil theft remains as great as ever; a recent report by UK think tank Chatham House claims that an average of 100,000 barrels per day are being stolen, at a cost to Nigeria of $8billion a year.
Clare Short points out that “the reforms that come from [the EITI audit report] haven’t been implemented yet. So, we are at a crucial point now where you need informed demand for a change”.
It will be interesting to see how these changes are implemented and what, if any, provisions there are for openness and transparency in the controversial Petroleum Industry Bill that is on the horizon.
Hopefully international pressure can continue to play its part, encouraging Nigeria to continue to move forward on the issue.
Angola
Perhaps the greatest challenge facing the industry in Angola in recent times has been the “diversion” of oil revenues; companies are often encouraged to partner with Angolan companies which occasionally turn out to be fronts for government officials lining their pockets.
Since 2002, the Angolan government has taken several steps to introduce revenue and expenditure transparency into the public management of its petroleum and mineral wealth, including the publication of budgets.
More recently, statements by President Jose Eduardo dos Santos indicate a greater willingness to combat government corruption, and there has been an accelerated trend towards greater transparency, with the introduction of various laws including the Public Probity Law of 2010, obliging officials to declare their wealth, and new Money Laundering and Public Procurement laws.
All of this is hugely encouraging, nonetheless these reforms won’t be complete until Angola manages to implement a more sophisticated legislative and anti-corruption framework to underpin this structure.
Ghana
The huge discoveries made in Ghana over the past few years have sparked the Ministry of Energy and Petroleum in Ghana into action, setting up measures to ensure transparency in the oil and gas sector.
These include the establishment of an Independent Information Centre to provide information on oil and gas, as well as the training of journalists and Members of Parliament on oil and gas under the Oil and Gas Capacity Building Project (OGCBP).
Energy and petroleum minister Emmanuel Armah Kofi Buah has also stated his intention to extend the EITI, which has been operational in the Ghanaian mining sector since 2003, into the oil and gas sector in a bid to ensure transparency and accountability in the reporting and utilisation of oil revenues.
So Ghana can already count on a well established anti-corruption legal framework, but more opportunity exists to address the lack of resources available to the relevant government agencies to combat and curb corruption on the ground.
The oil and gas sector is vitally important to the future prosperity and well being of these West African nations, who now very clearly recognise for themselves the need and importance of implementing meaningful anti-corruption legislation.
It is enormously encouraging to see that real steps are now being taken to curb the negative trends which were so prominent in past decades.
And away from government circles, let us not forget the huge strides taken by the industry itself in this area; what oil company these days does not actively implement a “zero tolerance” policy to bribery and corruption?
So although serious problems remain, let us hope that the commitment by government decision-makers and by the industry itself to combating corrupt practices will bring significant improvements in transparency.
Penelope Warne is MD and head of energy at international law firm CMS Cameron McKenna
For many years, the oil and gas industry in West Africa has been tainted by its association with corruption, a problem that has been particularly manifest in the region’s largest hydrocarbon producing economies, including Nigeria, Angola and Ghana.
However, in recent times, there appears to have been a shift in attitude among the governing classes of these countries, and an encouraging recognition of the need for transparency, not only to reduce corruption but also to stimulate foreign investment, encourage financial independence and gain wider public trust.
Nigeria
Nigeria was only the second country to comply with the UK-led Extractive Industries Transparency Initiative (EITI), and has received widespread commendation for its new audit report on payments in the oil and gas industry.
Clare Short, the chair of EITI, admits that the “analysis done by Nigeria is very impressive”. Nigeria now has a number of anti-corruption agencies in place, including the Independent Corrupt Practices and Other Related Offences Commission (ICPC), which has carried a series of investigations. In 2011, Nigeria passed a new Freedom of Information Bill into law.
More recently, in May this year, this country received an EITI chairman’s award for showing leadership, determination, resourcefulness and going beyond the minimum standards of transparency in influencing country policy. It does seem Nigeria may finally be turning the corner in the war on corruption.
Problems do remain, of course. Critics point to the fact that despite the arrival of these new high profile agencies, to date only a few high-ranking politicians have been charged with corruption offences. The jury is, therefore, still out as to whether this process is bringing real, tangible progress.
Meanwhile, the problem of widespread oil theft remains as great as ever; a recent report by UK think tank Chatham House claims that an average of 100,000 barrels per day are being stolen, at a cost to Nigeria of $8billion a year.
Clare Short points out that “the reforms that come from [the EITI audit report] haven’t been implemented yet. So, we are at a crucial point now where you need informed demand for a change”.
It will be interesting to see how these changes are implemented and what, if any, provisions there are for openness and transparency in the controversial Petroleum Industry Bill that is on the horizon.
Hopefully international pressure can continue to play its part, encouraging Nigeria to continue to move forward on the issue.
Angola
Perhaps the greatest challenge facing the industry in Angola in recent times has been the “diversion” of oil revenues; companies are often encouraged to partner with Angolan companies which occasionally turn out to be fronts for government officials lining their pockets.
Since 2002, the Angolan government has taken several steps to introduce revenue and expenditure transparency into the public management of its petroleum and mineral wealth, including the publication of budgets.
More recently, statements by President Jose Eduardo dos Santos indicate a greater willingness to combat government corruption, and there has been an accelerated trend towards greater transparency, with the introduction of various laws including the Public Probity Law of 2010, obliging officials to declare their wealth, and new Money Laundering and Public Procurement laws.
All of this is hugely encouraging, nonetheless these reforms won’t be complete until Angola manages to implement a more sophisticated legislative and anti-corruption framework to underpin this structure.
Ghana
The huge discoveries made in Ghana over the past few years have sparked the Ministry of Energy and Petroleum in Ghana into action, setting up measures to ensure transparency in the oil and gas sector.
These include the establishment of an Independent Information Centre to provide information on oil and gas, as well as the training of journalists and Members of Parliament on oil and gas under the Oil and Gas Capacity Building Project (OGCBP).
Energy and petroleum minister Emmanuel Armah Kofi Buah has also stated his intention to extend the EITI, which has been operational in the Ghanaian mining sector since 2003, into the oil and gas sector in a bid to ensure transparency and accountability in the reporting and utilisation of oil revenues.
So Ghana can already count on a well established anti-corruption legal framework, but more opportunity exists to address the lack of resources available to the relevant government agencies to combat and curb corruption on the ground.
The oil and gas sector is vitally important to the future prosperity and well being of these West African nations, who now very clearly recognise for themselves the need and importance of implementing meaningful anti-corruption legislation.
It is enormously encouraging to see that real steps are now being taken to curb the negative trends which were so prominent in past decades.
And away from government circles, let us not forget the huge strides taken by the industry itself in this area; what oil company these days does not actively implement a “zero tolerance” policy to bribery and corruption?
So although serious problems remain, let us hope that the commitment by government decision-makers and by the industry itself to combating corrupt practices will bring significant improvements in transparency.
Penelope Warne is MD and head of energy at international law firm CMS Cameron McKenna
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