EXTRACTIVE INDUSTRIES AND PARLIAMENTARY OVERSIGHT: MAKING THE LINK Dr. Rasheed Draman

Extractive Sector and Developing Countries Many developing countries rich in natural resources Challenge: Ensuring that revenue from extractive sector is used to help reduce poverty and improve living standards of population NATURAL RESOURCES ENHANCED WELFARE

Extractive Sector Governance Transparency and Accountability Strong institutions Clarity of Goals, Roles and Responsibilities Accurate and timely information

Extractive Sector Governance Proper policies and regulatory frameworks Effective systems and processes for decision- making and implementation Proper oversight of revenue management and wealth distribution

Failure of Extractive Governance – “The Resource Curse” Conflict Corruption Damaged social contract/compact Difficult macroeconomics: volatility excessive borrowing; low savings Skewed development Lack of diversification/ enclave effects Insufficient investment in human resources Lack of democracy and human rights All leading to low growth & worsened level of poverty

Dividends of Good Extractive Governance Peaceful Society Investor confidence Diversified economy with forward & backward linkages to the extractives sector Economic Growth Improved Social Infrastructure Shared Prosperity Positive Corporate Social Response

THE PARLIAMENT-LED REFORM PROCESS Weak Governance System/ Structures Status quo No or Weak Laws & Institutions Strong Governance Framework Improved state Good Laws & Well Resourced Institutions Parliamentary - Representation - Legislation - Oversight

THE EXTRACTIVE INDUSTRIES VALUE CHAIN Decision to extract the Resource Negotiating the best deals for the Resource Developing the Resource Properly Collecting and Maximising Revenue Ensuring Long Lasting Prosperity

Role for Parliament in the Extractive Value Chain Decision to extract the Resource Assessment of the resource base and potential social & economic impact in exploiting it Obtaining prior informed consent of resource owners or communities

Role for Parliament in the Extractive Value Chain Negotiating the best deals for the Resource The Award of Contract relies on: Institutional, legal, regulatory and contractual framework Open access to title Local content

Role for Parliament in the Extractive Value Chain Developing the Resource Properly During Monitoring of Operations (Regulation) important to ensure that it is: In line with contract clauses In line with international standards National cadastre Geological data centre

Role for Parliament in the Extractive Value Chain Collecting and Maximising Revenue Fiscal terms choice Transparent reporting Procedure to budget EI revenues Country economic policies Revenue saving and expenditure Transparent revenue redistribution

Role for Parliament in the Extractive Value Chain Ensuring Long Lasting Prosperity Revenue to benefit the population Ensure procurement practice Monitor expenditure at local level

A Role for the State??

The Case of Ghana Parliamentary Centre has supported the Parliament of Ghana since 2009 in strengthening its oversight capacity of its emerging petroleum sector Key committees: the Committee on Mines and Energy the Committee on Local Government and Rural Development the Finance Committee the Public Accounts Committee

The Case of Ghana Support included: Capacity building to better understand the sector and make new laws Training on key governance issues in extractive industries Facilitation to participate in international conferences and networking sessions to share ideas Implementation of public consultation on petroleum bills Expert analyses and direct input into bills under consideration and amendments, through memorandum

The Case of Ghana Several key results have been achieved: Parliament adopted the Petroleum Revenue Management Act, 2011 (Act 815) Parliament rejected a weak Exploration & Production Bill and insisted redrafting An independent regulatory body - the Petroleum Commission was established An innovation – the Public Interest Accountability Committee (PIAC) established Greater insight on extractive revenues and potential increased demands for accountability Active Civil Society Short Guide to Parliamentary Oversight of the Oil & Gas Sector

Oversight Challenges Oil Partisan Politics Lack of resources for oversight Extractive Industry Transparency Initiative (EITI) Legislation – from voluntary to non-voluntary Contract Transparency Disclosure of Revenues/Corporate Taxes The Africa Progress Panel Report 2013 Freedom of Information Law – “The Right To Know” Legal Process Good laws but no resources for implementing the laws – i. e. PIAC

A United Parliament and Independent Committees Effective oversight depends on how united Parliament is in protecting its independence and institutional interests – Partisanship – Executive Dominance/Subordination of Parliament – Fusion vs. Separation of Powers – Winner-takes-all How skilled or determined/independent committees are in utilizing powers, rules and tools available to them