CSO coalition(Hakirasilimali) Comments on Petroleum Bill 2015

No. Section As in the draft bill Recommendation for Amendment  Reasons for the proposal
1. 6. The Commissioner for Petroleum Affairs shall be the advisor of the Minister on policy, plans and regulations as well as the day to day administrative matters in the oil and gas subsector. T o create Deputy Commissioners with specific functions on Petroleum and/or  Energy It may be appropriate to retain and strengthen office of the Commissioner for Energy to avoid overlap 
2. 7. There shall be constituted within the Office of the President the Oil and Gas Advisory Bureau which shall advise the Cabinet on strategic matters relating to oil and gas economy. a)      As a coordination mechanism for authorising environment, it can be established by executive directive just like the Presidential Delivery Bureaub)      No functions, roles  and responsibilities outline Despite its importance it should not be created by the statute. 
3. 10.-(1) 
The National Oil Company shall perform the following functions:
(a)   advising the Government on policy matters pertaining to petroleum industry;
Should be left to Commissioner, PURA and EWURA  To avoid conflict of interest as key commercial player in the sector
4. 10 (2) The National Oil Company, shall have exclusive rights over natural gas midstream and downstream value chain to undertake the following: Mid stream and downstream should be subject to competitive diverse players to avoid monopoly.Define what is exclusive? Is it excluding other competitors or ensuring NOC does not have to go through licensing processes? ·         Possible undermining the roles of regulator as set  in Sub-Part IV on licensing of midstream and downstream activities·         Elimination of business competition which will hinder achievement of local content targets.

·         It also raises transparency and accountability challenges

 

5. S. 45 The National Oil Company shall have exclusive right over all petroleum rights granted under this Part.
  • These two sections are conflicting  S.45 (40 specifies the NOC share and S. 219 (1) which gives the government discretion to decide the share
  • The exclusive rights for NOC should be subjected to parliamentary scrutiny
·         This section raises accountability challenges as well it may create institutional monopoly.·         TPDC may serve its commercial interest which may not necessarily be national interest.

·         This contravenes with policy of open bidding but also section 49 of this Bill.

 

 

 

6. 51.-(1) The Minister may, by notice published in the Gazette, declare certain block to be reserved for public interest or to be awarded direct to the National Oil Company.
  • What is Public Interest? Develop criteria for determining public interest
  • The law should demand the Minister to be base decision on technical recommendation by PURA.

 

  • The Minister has wide discretional power without checks and balances.
  • It minimizes transparency and accountability
7. 92(1)(2) 

93(1)

 

 PURA may, with a written approval of the Minister, make available to the public 

The data submitted to PURA by a licence holder shall be treated as confidential and  not be reproduced or disclosed to the third parties by any party under this Act except-

·         All the information should be open as under commitments under EITI and Open Government Partnership(OGP)·         The information should be accessible for public  free of charge ·         Charging fee may be used as way of concealing the information from the public.·         It also includes academic institutions that may be needed for learning and research
8. 101   3) The licence holder and contractor shall not flare or vent petroleum without prior consent from PURA.(5) Nothing in this section shall prevent the licence holder and contractor from flaring petroleum in. ·         It should be the Minister to issue permission to flare upon written advice from PURA and NEMC·         The powers of NEMC should be clearly spelt out in environmental management of the sector

 

The issue of gas flaring should have been captured under section 209 to give more powers to NEMC  as it has economic and environmental .It should be left to PURA alone.

General Comments

  1. The role of the Commissioner for Petroleum Affairs (Section 6) is not clear, and more detail on that person’s appointment process, responsibilities, and/or place in the institutional hierarchy would help avoid risk of confusion.
  2. The Bill contains no requirements for PURA, EWURA or TPDC to report to the public or to Tanzania’s parliament. Nor does any specific requirement for these entities to report on their activities or the evolution of the sector appear to be included within the draft Extractive Industries (Transparency and Accountability) Act. International practice has shown that strong mechanisms for promoting performance and accountability among regulatory bodies and state-owned entities are closely correlated with success. At a minimum, we recommend that each of these bodies be required to conduct an annual independent audit and to lay a copy of that audit and an annual report on activities before the National Assembly. Such provisions could, for example, be included in Section 10 (for TPDC), Section 13 (for PURA)and/or Section 31 (for EWURA).
  1. The Bill takes certain positive steps toward promoting transparent and competitive licensing of upstream licenses. But in addition to the confusion surrounding the terminology on TPDC’s role, discussed above, there is room for improvement in other elements of the licensing/contracting procedure:
  • Section 46 provides relatively weak procedures for pre-qualification. It may be that not all elements of the pre-qualification process need to be included in this law, but at a minimum the law should call upon the Ministry/PURA/TPDC to establish standard procedures for assessing company “capacity, technical knowledge and financial capability.” As it stands now, the language of 46(b) leaves the door open to significant, and unnecessary, discretion.
  • Section 49 could be strengthened by:
    • Clarifying the conditions in 49(3) under which a shift from competitive tender to direct negotiation is permitted. The current drafting—“ Where all or part of the area tendered in a competitive public tender process for an award of an agreement has not become effective, and it is for the public interest”—is unclear and leaves scope for substantial discretion.
    • Requiring the Minister to declare publicly the reasons for opting for award by direct negotiation.
    • Supplementing Section 49(2) with requirements to publish the scoring criteria for a tender process, and the reasons that a winning bidder was selected.
  • The penalties set for the offences by corporations do not reflect the consequences and impact of the petroleum sector.

It will therefore not deter contravening of the rights and obligation under this bill (Section 96,98, 99, 100)

For example section 209(7)

A person who carries on management of production, transportation, storage, treatment or disposal of waste arising out of petroleum operation without a licence or fails to comply with the terms and conditions prescribed in the licence, commits an offence and shall be liable on conviction to a fine of not less than five million shillings or to imprisonment for a term of not less than six months.

                          Contribution from:                                       

  1. Oil and Natural Environmental Alliance(ONGEA)
  2. Policy Forum
  3. Interfaith Committee on Economic Justice
  4. HakiMadini
  5. International Alliance of Natural Resources in Africa(IANRA)
  6. Governance and Economic Policy Centre

Leave a Reply