EXTRACTIVE INDUSTRIES
BENEFITING FROM EXTRACTIVE INDUSTRIES THROUGH PARLIAMENTARY OVERSIGHT
The Concluding Statement from an October 2012 Global Seminar on the Role of Parliaments and Extractive Industries points to steps Parliaments can take to ensure that the development of mineral, oil and gas resources is a benefit rather than a curse for their societies. Parliamentarians from selected resource-rich Commonwealth jurisdictions shared experiences with experts from international organizations to identify problems and solutions.
Proposals to strengthen parliamentary oversight of extractive industries so they are developed in a transparent and accountable way which benefits their societies and the wider world have been identified by a select group of Parliamentarians from 11 Commonwealth jurisdictions with extractive industries. The proposals came out of a seminar from 29 to 31 October 2012 at the Joint Vienna Institute in Vienna, Austria, that brought Commonwealth Parliamentarians together with representatives from the International Monetary Fund, the World Bank Institute, the Revenue Watch Institute and the Parliamentary Centre (Ghana). The proposals offer Parliaments, parliamentary committees and individual Parliamentarians guidance on specific processes they and multi-stakeholder groups could use to ensure that mineral and petroleum resources are converted into social and financial assets for the benefit of the people of the jurisdictions which own them. They will help governments to provide a stable environment and efficient, effective and robust
policy, legislative, administrative and regulatory frameworks for investment in exploration, development and marketing of these resources. The proposals are built on the fundamental principle that all stakeholders will have confidence in the development process if it is managed in a fully transparent way throughout the life of the projects. It was recognized that mineral and
petroleum resource development is a highly complex, technical and volatile field. The resources themselves are non-renewable and consequently finite. Transparency and accountability are therefore essential to re-assure all stakeholders that expectations are reasonable, developments are fair and benefits are spread equitably throughout society. The group therefore encourages all Parliaments and Parliamentarians to support efforts to enhance the transparency of the sector, including projects such as the Extractive Industries Transparency Initiative and contract monitoring. The group stressed that the
provision of processes to ensure transparency and proper scrutiny is
38 | The Parliamentarian | 2013: Issue One
only the starting point. Governments, Parliaments and other stakeholders must have the capacity and the will to use the processes fully and vigorously. The following are some of the
main proposals that emerged from the discussion:
Enabling parliamentary engagement
1. Parliament must approve clear and well-considered policies on extractive industries which are part of a comprehensive development plan. 2. Parliament must scrutinize gov- ernment institutions, administrative processes and regulatory agen- cies involved in extractive industry development. 3. Parliament must have access to the contracts, licences and other agreements between the govern- ment and resource developers and investors, including provisions on changes in ownership of projects and the arbitration of disputes. 4. Parliaments and parliamen- tary committees must have clearly defined roles in the approval of contracts, the oversight of regula-
tory agencies and the scrutinizing of income and expenditure of revenue emanating from resource develop- ment.
Scrutinizing extractive industry agreements
5. Provided the selected fiscal process or processes are run ef- ficiently and transparently, revenue from extractive industries can be obtained equally effectively through the sale or auction of contracts including production-sharing regimes, through taxes and royalties including the licencing of exploration and exploitation areas and through direct state ownership either as a majority or minority shareholder. 6. A combination of revenue pro- cesses can be beneficial if there is a need to obtain revenue early in the development of extractive industries. 7. Stabilization clauses seeking to shield companies from future political and legislated changes are inappro- priate and generally ineffective. 8. Commercial confidentiality should be kept to a minimum and should be time-constrained.
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