Maravi

Expert calls for transparent regime to manage oil sector

Expert calls for transparent regime to manage oil sector
By Fridah Zinyama
Thu 14 Jan. 2010, 04:00 CAT

AN economic expert has urged the government to put in place a transparent regime to manage the oil and gas industry for the benefit of the country and local communities.

UK-based University of Sussex Economics lecturer Patrick Mulenga stated that all oil and gas Development Agreements (DAS) should be approved by Parliament prior to implementation to avoid problems in future.

He stated that the government needed to learn from the experience with the mining companies and ensure local people benefited from the oil and gas industry.

Seven companies had so far been awarded contracts to explore for oil and gas in North Western Province.

Responding to a press query, Mulenga stated that government must immediately establish an Oil Industry Environmental Management Programme (OIEMP) in each area or region.

“This will be similar to the Copperbelt Environmental Project (CEP) which can be used as the blueprint,” he said.

Mulenga indicated that the OIEMPs could address issues of infrastructure development, environment, public health, employment of local people connected to oil exploitation activities in each specific region.

“Like the CEP, each OIEMP will be managed by a management committee of stakeholders including, but not limited to, technocrats from relevant government ministries, ZCCM-IH, area chiefs, area councillors, selected NGOs, Church representatives and officials from the local authority,” he suggested.

Mulenga stated that the management committee would prioritize and monitor expenditure on specific development requirements and other issues.

“Successful bidders will contribute up to 25 per cent of the exploration fees payable into an OIEMP Fund for each region,” he stated.

Mulenga stated that government must put a time limit to exploration activities with specific activity timelines.

“Before drilling licenses are issued, government, with input from the OIEMP management committees and other stakeholders should prepare an Oil and Gas Extractive Industry Act, similar to the Mines and Minerals Act, incorporating meaningful Royalties and Windfall Taxes in addition to the usual taxes and levies,” he stated.

Mulenga suggested that up to 15 per cent of royalties and 30 per cent of windfall taxes be imposed on companies that would develop the oil industry and that proceeds should go directly into OIEMP Fund accounts for each region.

“For this fund to be successful, the Ministry of Finance should monitor and audit the individual Fund accounts,” he stated.

Mulenga further added that the drilling licenses and Development Agreements (DA) with each drilling company must not be significantly different.

“Each draft DA must be discussed with, and have input from, the regional OIEMP management committee and, ideally, should invite public comment similar to the Environmental Council of Zambia Environmental Impact Assessments,” he added.

Mulenga stated that it would be reassuring if all oil and gas DAs were approved by Parliament prior to implementation to avoid problems in future.

“However the important consideration is that they should be public documents; not state secrets, otherwise they will be open to abuse,” he stated.

Mulenga further suggested that up to 20 per cent of the Exploitation (Production) Licence fees payable should go into the OIEMP Fund for the area or region in which the activities would take place.

“These proposals will help to ensure that local people derive meaningful benefits from their resources,” stated Mulenga.

Labels: FUEL, OIL, PATRICK MULENGA, PROCUREMENT SYSTEMS

posted by MrK @ 5:17 AM