31 October 2012

Angola: Debating the Oil Industry in Cabinda

opinion

It is no secret that the oil industry in Angola is shrouded in secrecy. Very few people have any idea about how much is oil produced and how much revenue flows to the Angolan state - let alone what happens to it.

But an unprecedented conference in the oil-rich but desperately poor and underdeveloped province of Cabinda - along with the presentation of two major research reports - has shone much more light on the industry and on the fact that soaring oil prices and profits have had little impact on the everyday lives of most Angolans.

Organised by the Angolan office of the Open Society Initiative for Southern Africa (OSISA), the all-day conference on Saturday 27 October focused on Angola's petroleum industry and in particular on transparency and the impact of oil revenues on people's socio-economic rights.

Nearly 70 people packed the conference room in the Hotel Dellaz, including many students from both public and private universities in Cabinda, government officials, the head of the oil workers union, community members and journalists from Cabinda and Luanda.

The event provided OSISA with the opportunity to present two major research reports - Angola's Oil Industry Operations and Oil Revenues in Angola: Much more information but not enough transparency, which was produced in partnership with Global Witness.

Angola's Oil Industry Operations provides a detailed look at the structure of the industry and highlights its key weaknesses - particularly lack of transparency, rampant corruption and failure to use oil revenues for the benefit of all.

"Angola's oil production drives an enclave economy that enriches wealthy political elites and leaves the masses in dire poverty," says the report. "Millions of dollars are being diverted from the state treasury, either through institutionalised or straight up corruption. Angolan elites and public officials are reaping huge profits from the legal obligations of multinational companies to contract with Angolan companies. Multinational companies, for their part, turn a blind eye to corruption."

"Oil revenues, which should be invested in social sectors and in diversifying the economy to support the country's long term sustainable development, are instead reinvested by Sonangol in joint ventures and subsidiary businesses, which benefit just an elite few," the report adds, stressing that the problems in the oil industry are part and parcel of broader governance problems. "In Angola, people are poor because the country's institutions are dysfunctional and have not provided the needed checks and balances. Corruption is just a symptom of the deeper malady of weak, failed or missing institutions.

The report concludes with a list of recommendations to promote more transparency, knowledge, public awareness and investigative reporting as well as to establish mechanisms to hold both Sonangol and multinational companies to account.

The second report - Oil Revenues in Angola: Much more information but not enough transparency - looks at officially available data and finds that figures for "oil production, exports, domestic sales, prices and above all, revenues, are not reliable. None of the figures appear to be independently verified (with the partial exception of Sonangol's accounts, which are audited by an international accounting firm )... the figures from different agencies show numerous gaps, discrepancies and anomalies which are hard to explain, based on the available information.

This report does not allege that the figures show evidence of corruption and fraud and it is possible that, with independent verification, at least some of them could be confirmed as accurate. But at present, there are too many problems for the official data to be accepted as reliable or comprehensive."

Given the glaring problems with the data and the critical need for accurate figures, the report calls on the Angolan government to ensure much more detailed and comprehensive reports on the oil sector by state agencies that are independently verified by third parties; foster an atmosphere of public debate about the oil sector in Angola, including greater scrutiny of Sonangol by legislators and the public; and scale back the role of Sonangol so that it focusses on its core activities of oil production and marketing; and create an independent regulator for the Angolan oil sector.

The participants at the conference debated the findings of both reports as well as a number of other issues before signing up to a communique, which highlighted a few major concerns - such as corruption, conflict in Cabinda, lack of information about oil production and revenues, and the absence of public debate on the country's biggest industry - and concluded with a series of recommendations for different stakeholders.

For example, the communique called on the government to publish exact figures, impose greater controls on Sonangol, adopt a more pro-active role regarding oil spills and monitor multinationals more closely. It also called on Sonangol to publish contracts and financial reports and on parliament to step up its oversight of the industry, particularly the behaviour of multinationals.

The conference was, without a doubt, a resounding success and the two reports will certainly help to spark debate about the country's oil industry and hopefully encourage greater transparency as well.

But the event also served as the launch pad for a new multi-year campaign by OSISA for greater transparency and accountability. So t-shirts were distributed to all the participants, emblazoned on the front with the campaign's key slogans, such as:

I COULD BE A DOCTOR. But only if the government would distribute the oil money justly

(EU PODERIA SER MÉDICO. Mas só se o governo distribuísse justamente o dinheiro do petróleo)

And on the back with the campaign's tagline:

The oil is also mine! For a just growth and distribution for all Angolans

(O petróleo também é meu! Por um justo crescimento e distribuição para todos os Angolanos)

Documentation:

Oil Revenues in Angola: Much more information but not enough transparency

Angola's Oil Industry Operations

Oil Revenues in Angola: Much more information but not enough transparency

http://www.osisa.org/other/economic-justice/angola/oil-revenues-angola-much-more...

Global Witness

http://www.globalwitness.org/

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