Trans­parency cook­ies are in the oven

Executive Magazine - - Special Report - By Jeremy Ar­bid

The tools to mon­i­tor Le­banon’s hoped for oil and gas sec­tor are nearly on the work­bench. In Jan­uary, the gov­ern­ment com­mit­ted it­self to join­ing a global trans­parency ini­tia­tive, and in March, a draft law pro­mot­ing the fu­ture sec­tor’s trans­parency was fi­nally shown to the pub­lic. Taken to­gether, they could help Le­banon build a clean oil and gas in­dus­try.

But, the draft law is no longer be­ing billed as an anti-cor­rup­tion bill. In­stead, the law, un­der prepa­ra­tion for at least the past two years, is now be­ing touted as leg­is­la­tion to sup­port trans­parency in the petroleum sec­tor. The name change can be likened to a mar­ket­ing tool – the word cor­rup­tion was in the law’s ti­tle, it would sug­gest that there is a bat­tle to wage, and that the sec­tor is al­ready dirty. Pitched dif­fer­ently, as pro­mot­ing trans­parency, rep­re­sents a glass-half full ap­proach – it both sounds pret­tier and presents a bet­ter im­age.

The law has passed through sev­eral drafts in the last cou­ple of years, which Ex­ec­u­tive cov­ered in its 2015 and 2016 spe­cial re­ports on oil and gas. In late March, it was re­leased to the pub­lic and is now ready for Par­lia­ment to de­bate and vote on.

Ear­lier this year, Le­banon com­mit­ted to join­ing the Ex­trac­tive In­dus­tries Trans­parency Ini­tia­tive (EITI). The EITI is a vol­un­tary global trans­parency ini­tia­tive led by gov­ern­ments, com­pa­nies and civil so­ci­ety, and is a tool to fa­cil­i­tate the dis­clo­sure of in­for­ma­tion. Its stan­dards in­clude re­leas­ing such in­for­ma­tion as: the al­lo­ca­tion of rights, pro­duc­tion data, rev­enue trans­fers to lo­cal ju­ris­dic­tions, the in­dus­try’s so­cial im­pact, and rev­enue man­age­ment. It pro­motes trans­parency by en­cour­ag­ing the gov­ern­ment, the com­pa­nies awarded ex­plo­ration li­censes, and civil so­ci­ety to share in­for­ma­tion and de­cide what ad­di­tional data should be pub­lished.

The draft law goes hand-in-hand with EITI by cod­i­fy­ing its cur­rent stan­dards. The law would man­date that signed con­tracts, the terms of the li­censes, ben­e­fi­cial own­er­ship, as well as pay­ments from com­pa­nies to the gov­ern­ment should all be pub­lished.

“Ev­ery sin­gle item found in the EITI is there; it is a very good re­flec­tion,” says Diana Kaissy of the Pub­lish What You Pay NGO on the mer­its of the draft law. The main dis­tinc­tion be­tween the pro­posed leg­is­la­tion and the EITI is that the lat­ter in­volves for civil so­ci­ety. “That’s the big ad­van­tage of the EITI. But the EITI is

Le­banon takes nascent steps to­ward clean oil and gas sec­tor

tied to po­lit­i­cal will, so even if that dis­ap­pears we could fall back on the law,” Kaissy tells Ex­ec­u­tive.

If the re­lease of so much data were man­dated by the draft law, the EITI could then be used to col­lect other in­for­ma­tion, such as data on en­vi­ron­men­tal pru­dence and pro­tec­tion, so­cial im­pact and cor­po­rate so­cial re­spon­si­bil­ity. Were the law rat­i­fied, Kaissy says, “We can re­ally go wild and be very cre­ative in the EITI re­port.”

It is not clear whether Par­lia­ment will vote on the law be­fore the gov­ern­ment signs its first ex­plo­ration con­tracts in Novem­ber. And, to be truly ef­fec­tive the law would re­quire aux­il­iary leg­is­la­tion. The bill points to a yet un­leg­is­lated anti-cor­rup­tion com­mis­sion as the ar­bi­tra­tor when com­pli­ance comes into ques­tion or in­frac­tions oc­cur. Walid Nasr, the Lebanese Petroleum Ad­min­is­tra­tion’s point man for strate­gic plan­ning, down­played the lack of that body in the near-term. “Many of the pro­vi­sions of the [draft] law are re­lated to pub­lish­ing in­for­ma­tion and don’t re­quire any other party,” Nasr tells Ex­ec­u­tive, adding that much of what is writ­ten in the draft law is al­ready in­te­grated in oil and gas reg­u­la­tions. But, if there were in­frac­tions, like bribes, or non-com­pli­ance by the gov­ern­ment or com­pa­nies in pro­vid­ing or pub­lish­ing data, then the an­ti­cor­rup­tion com­mis­sion would def­i­nitely mat­ter.

As for the EITI, Nasr says the gov­ern­ment has al­ready com­mit­ted to join­ing and is waiting to sign con­tracts later this year to learn which com­pa­nies will be par­tic­i­pat­ing in the trans­parency ini­tia­tive. Civil so­ci­ety will join the gov­ern­ment and com­pa­nies, but faces a long road of prepa­ra­tion to choose its rep­re­sen­ta­tives and demon­strate their ca­pac­ity and cred­i­bil­ity for en­forc­ing oil and gas trans­parency. “This is some­thing civil so­ci­ety needs to work on to have re­ally strong rep­re­sen­ta­tion and an ac­tive role,” Nasr says.

The EITI is com­ing, but it will be up to civil so­ci­ety to force the gov­ern­ment to stick to its prom­ises of trans­parency. The onus is on civil so­ci­ety to fig­ure out how it will bring to­gether non-prof­its that have com­pet­ing in­ter­ests. The gov­ern­ment will move for­ward re­gard­less, with or with­out the EITI and the draft law. Civil so­ci­ety must be an ac­tive part­ner in the for­mer and must lobby Par­lia­ment to rat­ify the lat­ter.

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