East Africa gets legal support on resources
By STEVE MBOGO Special Correspondent
Posted Saturday, February 8 2014 at 18:45
Kenya, Tanzania and Rwanda have started receiving support in how to
negotiate and structure natural resource contracts from the African Legal
Support Facility (ALSF).
Proper production sharing agreements with resource extractors are the first
step towards avoiding conflict linked to resource extraction, based on
lessons from other countries, said Stephen Karangizi, director and chief
executive officer of the ALSF.
ALSF is an initiative of the African Development Bank (AfDB) to help African
countries with international best practice legal standards required in the
negotiation and drafting of resource exploration and extraction agreements.
We are having a continuous dialogue with all the EAC countries to support
them in negotiations of natural resource development. In the case of
Tanzania, Rwanda and Kenya, the ALSF board has already approved projects to
support in negotiations as well as capacity building, said Mr Karangizi.
Tanzania has discovered gas, Rwanda is exploring for commercial gas while
Kenya has confirmed commercial quantities of crude oil. Mwendia Nyaga, the
chief executive at Oil & Energy Services Ltd, said countries that have done
well have gone ahead to to take charge of management of their resources.
These countries ensure that they develop the right policies and make sure
they are followed, he said. Such policies include licensing policy and
strategy of knowing when to license, how to license and how to bring in
local companies as players in the sector.
Other considerations, he said should include environmental management
policies; local content policies determining how local goods, services and
manpower are integrated into the new industry; and revenue management
policies covering issues of revenue collection, management and distribution.
Gabriel Negatu, the regional director of AfDBs East Africa Regional Centre
said a new wave of resource extraction and increasing investment in power
generation require that countries have the required skills to negotiate
partnerships with the private sector.
The idea is to replicate four best practices used by countries that have
managed resources well.
A country needs to have a strong legal framework governing the natural
resources so as to enhance transparency in terms of what is accorded to the
investing companies when the final extraction agreements are concluded,
said Mr Karangizi.
It is important that countries have sufficient capacity to manage
negotiations with the investing companies both in terms of technical and
legal aspects. In the short term, before the country has developed its own
capacity, it can rely on international experts. However ,in the long term,
the country needs to develop its own capacity as managing the implementation
of the agreements is complex, he said.
Agreements concluded should also be flexible enough to take into account
possible economic changes such as increase or decrease in the demand for the
commodity being extracted.
The other important aspect is provision of as much information as possible
to both the state and non-state actors to avoid the myths about natural
resources that trigger conflict.
In many cases there is an exaggerated expectation that the resources are a
panacea for all the countrys development challenges, whereas they should be
viewed as part of the contribution to development, said Mr Karangizi.
He said managing expectations within the government and the public and
helping them to understand that the time between the discovery of the
natural resources and receipt of revenues by the state is very long, usually
at least 10 years, is important.
The main lessons to take from countries that have failed to benefit fully
from their natural resources are that certain best practices are the best
guarantee against such failures, he added.
EM
On the 49th Parallel
Thé Mulindwas Communication Group
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