Immediate Reform Needed If Liberians Are To Profit From Potential Oil Finds, Report Shows

Global Witness

LONDON/MONROVIA – Far-reaching reforms of Liberia’s oil sector are urgently needed if its population is to benefit from future oil discoveries, says a report released today by Global Witness (1) and the Liberian Oil and Gas Initiative (LOGI) (2). As the country heads to the polls in October, and with major oil companies such as US giant Chevron trying to find oil in Liberia, these reforms must be a priority for any new government.

Curse or Cure? How oil can boost or break Liberia’s post-war recovery provides an analysis of Liberia’s current oil sector. It finds that government officials and at least one company have paid bribes to ensure contracts were ratified in breach of Liberian laws, while companies with little experience in the oil sector have also received concessions. The report sets out what needs to be done to reform the sector, so that it can be used to generate funds for much-needed development.

“The decisions taken by the new government and international donors in the coming months could define our future: they must reform the sector now or risk continuing the corruption and instability of Liberia’s past,” said Jonathan Yiah of Sustainable Development Institute, a member of LOGI. “The warning signs are stark – this report shows at least one company, and even government officials, bribing Liberian legislators. This must change or we will again waste our resources and lose one of the best chances we have to build a sustainable economy.”

The report raises a number of specific concerns over the governance of Liberia’s oil sector:

The government agency responsible for managing the oil sector – the National Oil Company (NOCAL) – is also a profit-making enterprise, which regulates the same companies it does business with. This conflict of interest has brought predictable results, with NOCAL paying members of the Liberian Legislature to ratify oil contracts between 2006 and 2008.
In 2007, Nigeria’s Oranto Petroleum authorized a bribe to be paid to the Legislature in connection with the passage of at least one of its contracts. In 2010, US company Chevron purchased a 70 % share of the same contracts, despite information about how they were obtained being in the public domain.
Liberia’s oil laws contain wholly inadequate provisions for the impact of oil extraction on Liberia’s people and environment, and the country lacks the financial safeguards to protect its economy from being destabilized by, or over reliant on, oil revenues.

“The Liberian Government has made some promising improvements in the resource sector, promoting transparency through the Liberian Extractive Industries Transparency Initiative and developing a National Energy Policy that outlines oil industry reforms,” said Global Witness campaigner Natalie Ashworth. “However, this reformist spirit has been undermined by poor implementation and a tendency of government officials to break their own laws in the pursuit of apparent quick wins.Curse or Cure shows how much more the Liberian Government and partners like the US and Norwegian governments have to do to clean up the country’s resource trade.”

Today’s report outlines a series of reforms that must be adopted to achieve this goal:

The power to regulate oil companies should be taken away from NOCAL and given to a separate agency.
Separately managed oil revenue savings accounts should be established to prevent Liberia’s economy from becoming over reliant on oil money.
New oil laws should be developed that contain human rights, labour and environmental safeguards.
The government should investigate evidence of corruption in the sector and enforce its anti-bribery and transparency laws – this includes publishing all oil contracts.

Most importantly, the Liberian Government and international donors should undertake these reforms through a transparent and inclusive process, involving all relevant government agencies and representatives of Liberian civil society.

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Footnotes:

Global Witness investigates and campaigns to prevent natural resource-related conflict and corruption and associated environmental and human rights abuses
This report has been prepared by Global Witness and four Liberian civil society groups: Center for Transparency and Accountability in Liberia (CENTAL), Liberia Democratic Institute (LDI), Liberia Media Initiative for Peace Democracy and Development (LMI) and Sustainable Development Institute (SDI). CENTAL, LDI, LMI and SDI together form the Liberian Oil and Gas Initiative.

Contact:

Global Witness:

Liberia: Natalie Ashworth, +231 (0)77 353 104, nashworth@globalwitness.org; Jonathan Gant +231 (0)77 080 651, jgant@globalwitness.org;

UK: Oliver Courtney, +44 (0)7739 324962, ocourtney@globalwitness.org

www.globalwitness.org

Centre for Transparency and Accountability in Liberia (CENTAL):

Thomas Doe Nah: +231 (0) 651 1142, tnah@cental.org

www.cental.org

Liberia Democratic Institute (LDI):

Dan T Saryee, Sr: +231 (0)651 4348, dsaryeeldi@yahoo.com, liberiadmo_institute@yahoo.com; dsaryee@brandeis.edu,

www.ldi-lbr.org

Liberia Initiative for Peace, Democracy and Development (LMI):