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EXTRACTIVE INDUSTRIES AND PARLIAMENTARY OVERSIGHT: MAKING THE LINK. Dr. Rasheed Draman. Extractive Sector and Developing Countries. Many developing countries rich in natural resources

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  2. 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 NATURALRESOURCES ENHANCED WELFARE

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

  4. 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

  5. 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

  6. 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

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


  9. Role for Parliament in the Extractive Value Chain • Assessment of the resource base and potential social & economic impact in exploiting it • Obtaining prior informed consent of resource owners or communities

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

  11. Role for Parliament in the Extractive Value Chain • 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

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

  13. Role for Parliament in the Extractive Value Chain • Revenue to benefit the population • Ensure procurement practice • Monitor expenditure at local level

  14. A Role for the State??

  15. 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

  16. 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

  17. 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

  18. 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

  19. 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

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