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» 20.04.2010 - German executive sentenced for Nigeria bribery
» 23.02.2010 - Nigeria appeals for power back-up
» 02.02.2010 - UK to return £43 million stolen funds
» 27.01.2010 - Nigeria seizes fake drugs
» 05.01.2010 - Nigeria’s Central Bank refutes sack order reports
» 18.12.2009 - Appeals court rejects bail application for former ports chief
» 04.12.2009 - Nigeria uncovers $15.3 million scam in schools fees
» 25.11.2009 - Nigerian cyber fraudster in court

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Nigeria | São Tomé and Príncipe
Economy - Development | Politics

São Tomé, Nigeria sign oil transparency pact

afrol News, 28 June - Transparency is to become the ground rule in the Joint Development Zone between São Tomé and Nigeria, which soon will become São Tomé's first oil producing area. The São Toméan President achieved this during a visit in Nigeria this weekend, meeting his counterpart. The zone is set to become a showcase in transparent oil revenue management.

President Fradique de Menezes this weekend visited Nigeria and on Saturday met with Nigerian President Olusegun Obasanjo. The two Presidents, representing Africa's smallest and Africa's largest nation, agreed on new guidelines for the already established Joint Development Authority. The Authority manages the common marine territory between the two nations, where oil production soon is to begin.

Mr Menezes and Mr Obasanjo signed a declaration - dubbed the Abuja Joint Declaration - outlining the management of the joint zone. The declaration says the zone is to be managed in accordance with the Extractive Industries Transparency Initiative, meaning that oil production and revenues are to follow the most transparent model applied in the otherwise non-transparent industry. This is in stark contrast to the Nigerian oil industry.

According to the declaration, "the use of funds received by our respective governments from activities within the joint development zone shall be monitored and audited, with such audits being made public in accordance with the laws of our respective states." This places a heavy transparency clause on the public spending of both governments.

The declaration says that the Joint Development Authority is to publish an annual budget, "which shall be approved by the governments of Nigeria and São Tomé and Príncipe." The accounts and procurement contracts of the Authority and any entity operating in the zone will be subject to an annual and public audit "by an independent and internationally recognised auditing firm."

Further, the declaration obliges the joint Authority to "make public the basis for all awards of interest in the Joint Development Zone including the technical and due diligence analysis supporting such awards. All bids and supporting data, other than geological or similar proprietary data, shall be made public."

- All information which is to be made public pursuant to this declaration shall be posted and maintained on the website of the Joint Development Authority, the declaration goes on. The clauses in the declaration will make the joint zone one of the world's most transparent oil production regimes. This, the Presidents say, was made "in recognition of the importance that our civil society attaches to the transparency in oil revenue management."

Other than only big words, the declaration also includes a clear sanctions regime if transparency rules are not sustained. "Any failure to comply with these requirements and representations shall make such contract or agreement voidable by the Joint Development Authority or either of the two contracting governments," the declaration says.

The lack of transparency in the international oil industry has been increasingly criticised. Regional oil producers such as Equatorial Guinea, Angola and Gabon are highlighted as worst case scenarios for the oil newcomer São Tomé. In these countries, major parts of oil revenues that could be used to raise living standards are lost to corruption.

Also Nigeria has a historically poor record regarding transparency in oil revenue management. In particular during the pre-1999 military dictatorships, billions of US$ were lost to corrupt leaders. While the Obasanjo regime has sought to fight corruption, transparency in Nigeria's oil sector remains very limited.

For São Tomé and Príncipe, a two-island state in the Golf of Guinea, the forthcoming oil revenues could mean rapid social development for its small population or the development of an oil-rich elite. Consequently, the São Toméan parliament and the international community have demanded a high degree of transparency to assure that future revenues are invested in social development.

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