More than 150 Angolan civil society organisations and activists have written a letter to the US Securities and Exchange Commission (SEC) urging it to adopt strict rules for the disclosure of payments by oil companies working in Angola.
The large number of signatories illustrates how crucial this issue is to the future of Angola – and how concerned they are that the SEC will bow to pressure from companies and impose a lax set of regulations.
The SEC is mandated to produce the new regulations following the enactment of the Dodd-Frank Act, which was passed by the US congress in July 2010 and which requires oil, gas and mining companies that are listed on a US stock exchange to disclose in detail all the project and payments made to the governments of countries where have their operations.
Civil society in Angola is concerned that the commission is coming under strong and concerted pressure from oil companies to adopt rules that do not force them to disclose all payments to the Angolan government. But this would undermine the aims of Section 1504 of the Dodd-Frank Act and efforts to provide Angolan citizens with access to adequate information to ensure transparent and accountable management of the country’s natural resource revenues, which could transform the lives of all Angolans. In particular, civil society wants companies to be compelled to publish what they pay per oil block.
As the letter states,”While the Angolan government has introduced some important reforms in oil sector transparency in recent years, these continue to be too opaque for Angolans to discern how money is spent and thereby hold the government accountable for its actions.From 2004 onwards the Angolan Ministry of Finance has been publishing some details on its website of oil production by oil block and the revenues accrued to the government..but the data are inconsistent, unreliable and unaudited.”
The signatories also highlight the massive gap between the figures for oil production and exports published by the Ministry of Petroleum, the Ministry of Finance and Sonangol, the state oil company. “In December 2011, the International Monetary Fund reported there was an unexplained US$32 billion discrepancy in the Angolan government’s 2007-2010 fiscal accounts linked to Sonangol – this amounts to one fourth of the country’s total GDP.”
Petroleum companies are especially keen to ensure that the SEC does not make them report on each oil block – something that the authors of the letter believe is critical. “We would also like to stress to the Commission our strong support for block, or project, level reporting, as proposed by the SEC but objected to by petroleum company commenters. The Angolan government issues licenses on a block-by-block basis and aggregating this data to include all blocks in a particular geologic basin would only continue to obscure payment information to the Angolan government. Without reliable and detailed data, it is difficult for citizens to monitor the flow of revenues and ensure the Angolan government uses these funds in the long-term interest of the Angolan people.”
Depsite what many people believe, Angola currently does not prohibit disclosure. Indeed, it has been standard practice in Angola for the last 20 years to allow for disclosure of information by extractive companies to meet securities regulation requirements. For instance, the Norwegian company, Statoil, regularly reports payments made to the Angolan government to comply with Norwegian regulations.
The letter concludes with a clear call for as much transparency as possible to assist the people of Angola and the development of the nation. “The first step toward ensuring that money is well spent is understanding the data and understanding how much money is coming into the country. The Angolan government has unilaterally disclosed information similar to that called for by Section 1504 for each oil-operating license, but the data are not reliable. Increasing transparency of payments – at the project level – made to the Angolan government by oil companies would enable Angolan citizens to hold the government to account.”
And it could make an immense difference to the lives of Angolans. The country’s economy is one of the fastest growing in the world and the oil industry is the backbone of the economy, providing over 80% of government revenue and 50% of the GDP. Yet these revenues have not benefited the majority of Angolans, two thirds of who survive on less than US$2 per day in inadequate living conditions.
Angola is regarded as one of the most corrupt countries in the world and there is widespread concern and evidence that revenue flows that should be supporting the country’s development are not reaching the national budget and are being mismanaged.