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Liberia’s new oil law will help fight corruption in a sector that has been so vulnerable due to outdated laws, says environmental watchdog Global Witness or GW, which recent report on bribery among present and past top government officials here has caused some political stirs.

The new law requirescompetitive bidding for all petroleum contracts, and for all oil companies to declare their true owners, something that has not been a requirement in the past. GW said both of these changes could help fight the corruption that has long plagued the sector by assuring Liberians that only the most qualified companies get contracts and licenses are not awarded through backroom deals to government officials.

It said the law could also help Liberia meet its international commitments under the Extractive Industries Transparency Initiative (EITI), a global standard to promote the open and accountable management of countries’ oil, gas, and mineral reserves.

The law also requires that the National Oil Company of Liberia or NOCAL should no longer regulate private oil companies – regulatory power will instead be handed to the new Petroleum Regulatory Authority (PRA).

Under the old law NOCAL was tasked with regulating its partner companies, something GW described as a clear conflict of interest. “This law is a great start,” said Jonathan Gant with Global Witness in a statement issued last Monday November 28.

“Liberia has a history of natural resource mismanagement, not least in the oil sector where bribery has severely undermined Liberians’ faith in their government. The Petroleum Law, if implemented and backed up by equally progressive regulations, will help prevent corrupt deals from happening again,” he continued. 

The new Petroleum Law comes at a key time in the development of Liberia’s oil sector, GW said adding, the country is not yet producing oil but has awarded ten offshore licenses, some of which are held by US oil giants Chevron and Exxon. But with badly outdated laws and little government capacity, the sector has been vulnerable to the sort of corrupt abuse that has befallen neighbours like Nigeria.

How, GW observed that additional safeguards are neededto ensure that the Petroleum Law is effective. It said for instance, the law does not make clear what is meant by a beneficial owner, for instance, leaving those wishing to hide their assets too much room for interpretation. It is also not assured that companies’ ownership information will be made public, a critical step to ensuring that oil deals are free from corruption.

“It must also be noted that past efforts by the Liberian government to have companies declare their beneficial owners have not been successful. Liberia has pledged to follow standards established by EITI, which includes publishing extractive companies’ beneficial owners. However, when the Liberian government attempted in 2015 to get companies’ ownership information, 40 of the country’s 89 resource companies failed to provide the requested data,” GW said.

“Global Witness is also concerned at the large amount of oil revenue that the PRA will now have at its disposal. Until oil production starts, most of the money Liberia receives from companies comes in the form of large bonuses that companies pay to the government upon signing new contracts, such as the US$ 21 million bonus paid by Exxon in 2013 for its license. The Petroleum Law gives control of these bonuses not to the Ministry of Finance, where they could be spent on roads or education, but to the PRA for its internal operations. Past experience in countries such as Angola has shown that, when oil revenues are controlled by oil agencies, they can be stolen,” the statement went on.

“With the law in place, the government must now turn its attention to drafting regulations that close possible loopholes,” said Jonathan Gant. “These regulations must make sure that all natural resource companies declare the people who are ultimately in control, and make sure that signature bonuses are not lost from state coffers. And, unlike in years past, these rules must be enforced.”

-Othello B. Garblah

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