Pressure is on African nations to guarantee transparency of their oil revenues

Oil producing countries were under increasing pressure to disclose their revenue flows or risk losing out on major investments, a forum at the World Petroleum Congress said in Johannesburg this week.

"Unless they clean up their act, they won't get any big investments. There are certain countries in Africa that are going to suffer," said John Martin, the managing director of banking group ABN Amro.

About eight African countries were expecting a $35 billion (R225.2 billion) windfall in oil revenues this year, partly because of high oil prices.

There was a greater chance that this money would benefit the local population than in the past, said Karin Lissakers, adviser to currency speculator and philanthropist George Soros.

The Extractive Industries Transparency Initiative (Eiti), whose principles were agreed in 2003, encouraged the publication and verification of company payments and government revenues from oil, gas and mining.

About 20 countries, including Nigeria, have endorsed or are actively implementing the Eiti.

"We have to try and put pressure on oil mining companies to make available publicly what they pay to governments," said Lissakers.

"It's possible for governments and corporations to see how they can benefit from transparency."

Stuart Brooks, the head of international relations for the Chevron group, said it was not important to report just payments and revenues but also how this money was spent.

The World Bank had only started to confront countries on transparency during the past five to 10 years, said Michael Levitsky, a senior International Finance Corporation economist.

While progress so far had been dramatic, there was still a long way to go, said Lissakers.

She said countries would one day be required to disclose their revenue flows as a condition of listing on stock exchanges.

Levitsky said that the world's largest oil producer was probably the least transparent. India and China, the fastest growing countries, had made the scramble for resources their main priority.

"Chinese oil companies are marketing themselves to west African governments in that they don't care about governance," he said. "It's a mistake."

Oby Ezekwesili, Nigeria's minister for solid minerals development, said a three-pronged approach was needed to fight corruption.

Leadership had to send a clear signal that the climate of corruption had to change. Structural changes, such as an open and transparent budget system, were needed, as well as enforcement and legislation. "If you are able to take people to jail, it sends a very clear signal," she said.

Levitsky said while Nigeria was taking the lead in efforts to promote transparency, it was still difficult to determine which countries were making progress.

The New Partnership for Africa's Development (Nepad) had not yet taken up the issue of transparency. Lissakers said: "A proactive stance by Nepad would be hugely helpful in the African continent."

Levitsky said Africa was in an "almost unique position" of escaping from its history of inefficient revenue use.

Mauritania's oil and energy minister, Mohammed Ali Ould Sidi Muhammad, said: "We are determined to implement transparency because it is in our interest and because it is in our people's interest."

Source:  Business Report