20 April 2009

FRETILIN Petitions East Timor's Constitutional Court over National Petroleum Authority

FRENTE REVOLUCIONARIA DO TIMOR-LESTE INDEPENDENTE FRETILIN MEDIA RELEASE Dili, 20 April 2009 FRETILIN petitions Constitutional Court over National Petroleum Authority

FRETILIN MPs have asked Timor-Leste’s Constitutional Court to rule that the National Petroleum Authority created by the Gusmao government in June 2008 is unconstitutional and breaches the Petroleum Fund Law.

The party’s MPs lodged a petition with the Court of Appeal – exercising the jurisdiction of the Constitutional Court – on Friday (April 17) seeking a ruling that the Gusmao government did not have the constitutional power to create by decree, laws, penalties and sanctions governing petroleum exploration without parliamentary approval.

The petition also asks the court to find that, in providing that the National Petroleum Authority could charge and directly receive fees from oil companies operating in the Timor Sea, the Gusmao government breached the Petroleum Fund Law approved by parliament in 2005. The Petroleum Fund Law provides that all payments by oil companies to the state of Timor-Leste must be made directly into the Petroleum Fund.

FRETILIN’s parliamentary leader, Aniceto Guterres said in Dili today the Council of Ministers established the National Petroleum Authority by decree in June 2008, despite warnings from FRETILIN and non-government organisations that only parliament had the constitutional power to legislate on petroleum exploration.

“FRETILIN and many other organisations pointed out last year that the new petroleum law was drawn up in haste and secrecy, avoiding proper parliamentary and public scrutiny, and opened the door to corruption and mismanagement of the country's gas and oil revenues.

“Our concerns have only grown with the government’s secret deals regarding the Sunrise pipeline and LNG plant studies.”

Guterres quoted the leading Timor Leste NGO with greatest experience in the petroleum sector, La’o Hamutuk, as warning the government on 10 June 2008: “This should be a Law enacted by Parliament, not a Decree-Law approved by the Council of Ministers.”

La’o Hamutuk added: “Transparency is almost entirely lacking, and this law should be changed or augmented to ensure that important information is available to the public and that the public has meaningful input on decisions which affect them.” (http://www.laohamutuk.org/Oil/PetRegime/NPAlaw/08RestructIndex.htm#transparency)

Guterres said FRETILIN’s legal advisors had been preparing the petition since last year.

“It follows our successful petition against the 2008 Mid Year Budget which declared the Economic Stabilisation Fund unconstitutional and ruled illegal an attempt by Gusmao to withdraw hundreds of millions of US dollars in excess of the sustainable income allowed under the law,” Guterres said.

“Under the Gusmao administration, Timor Leste’s petroleum sector has suffered from a lack of transparency and probity with dubious deals done in secret without parliamentary scrutiny. As a responsible de facto opposition we are holding the government politically, legally and constitutionally accountable.

“We call on the government to respect the independence of the courts and the principle of the rule of law and accept whatever the court decides. FRETILIN will accept and abide by the court decision, whichever way it goes.”

Guterres said there was still time for the government and parliament to act before the court decision to avoid a potential institutional crisis in the petroleum sector, should the court rule against the constitutionality of the National Petroleum Authority.

For further information call Jose Teixeira on +670 728 7080

(See FRETILIN Media Release of 23 June 2008 below for background information)



Media Release

23 June 2008

Timor-Leste petroleum law opens door to corruption

Timor-Leste's new petroleum law has been drawn up in secrecy and haste and opens the door to corruption and mismanagement of the country's gas and oil revenues, FRETILIN said today.

'Greater public consultation and parliamentary scrutiny of this law is critically important to the future of our nation,' said FRETILIN MP and former Minister for Natural Resources, Minerals and Energy Policy, Jose Teixeira.

Xanana Gusmão's Parliamentary Majority Alliance de facto government (known by its Portuguese acronym AMP) enacted its National Petroleum Authority Decree Law on June 18.

The National Petroleum Authority (NPA) will replace the Timor Sea Designated Authority (TSDA) for the Joint Petroleum Development Area shared between Timor Leste and Australia. The NPA will also be responsible for regulating all petroleum exploration, production, processing and sales activities offshore and onshore in Timor-Leste.

'This law should not have been passed by decree of the Council of Ministers meeting in secret but should have been sent to parliament for scrutiny and approval,' Teixeira said.

'Also, the public was only given five working days to comment on the draft law, making a mockery of public consultation,' he said.

He said the draft law violates basic principles of the constitution and existing petroleum law and weakens parliamentary control over the petroleum sector and petroleum fund spending.

"Whenever the former FRETILIN government enacted any laws in the petroleum sector, we held wide public consultation and took time to receive and examine all public input. To us it was critically important for all stakeholders, especially our people and civil society, to understand fully and give their views on the laws we proposed to enact.'
Timor-Leste's petroleum fund created by the former FRETILIN government now totals almost US$3 billion in savings, and was rated the third most transparent sovereign wealth fund by the Peterson Institute for International Economics, second only to those of Norway and New Zealand.

'Petroleum is vital to the future of our nation. It has also has caused untold problems of corruption and environmental damage, and led to social and political conflict, in many countries,' Teixeira said.

'Meaningful public consultation that allows all stakeholders to contribute to enacting good law and reach consensus is the only way to avoid such conflict arising in Timor Leste.

'It is clear that many national and international stakeholders are disappointed and concerned with the secrecy and unnecessary haste with which this draft law has been managed.

'Parliament's own Natural Resources, Agriculture and Environment Committee did not even see a draft of the law. For the past six months, FRETILIN members have been asking the de facto Minister responsible for Natural Resources and/or his Secretary of State to appear before the Committee to outline developments in the petroleum sector, without any response.

'The de facto government's own press statements mention agreements with foreign oil companies to provide technical assistance to draft laws regarding the national optimisation objectives for Timor Leste's downstream petroleum sector.

'However, these agreements are shrouded in unnecessary secrecy, arousing suspicion amongst civil society and other stakeholders in the petroleum sector.'

On 10 April 2008 President Jose Ramos Horta called on the Gusmão de facto government to work with FRETILIN to gain national consensus on management of petroleum resources and revenues.

In a media release on 13 June 2008 Lao Hamutuk, a leading civil society group intimately involved with the development of the petroleum sector in Timor-Leste from its inception, was highly critical of the de facto AMP government's secret handling of the NPA law.

In its submission to the de facto government (http://www.laohamutuk.org/Oil/PetRegime/NPAlaw/08RestructIndex.htm)

Lao Hamutuk said: 'One of the 2002-2007 Government's proudest achievements was transcending party differences to achieve a unanimous parliamentary vote for the Petroleum Fund Act. This consensus model should be emulated, not circumvented. Involvement of elected representatives from both the governing parties, and the opposition is essential to provide stability for the future.'

Jose Teixeira said: 'In 2006, the then FRETILIN government received wide national and international acclaim for the unprecedented highly transparent manner in which Timor-Leste's inaugural offshore exploration licensing round was managed. The Bid Tender Independent Evaluation Commission's report was published and the minister's decision to award the successful bidders their areas and the full reasons were published. Then the production sharing contracts were published.

'Only the highest levels of transparency can ensure a corruption-free environment.
"Our highly transparent approach has been replaced by one of secrecy and obscurity. Vital questions are now being frequently and widely asked about conflict of interest and potential for collusion and unfair advantage.'

For more information contact: Jose Teixeira +670 728 7080 (Dili, Timor-Leste)

Image added by ETLJB: Map showing the location of East Timor.

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