Oil & Gas Specifics

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Transparency and Accountability

Policy, Legal and Contractual Framework

Sector Organization and Institutions

Fiscal Design and Administration

Revenue Management and Distribution

Sustainable Development

Burmese Case Study: Transparency and Accountability

Giovanna Panagiotidou

My name is Georgia Panagiotidou and I am a CEPMLP alumna. Originally from Greece, I completed an integrated MEng in Mining and Metallurgical Engineering with focus on Geotechnology from the National Technical University of Athens. I graduated with Distinction and was awarded the silver medal for second best academic performance in 2013. Following that, I completed my MSc in International Oil and Gas Management with a full scholarship from Hellenic Petroleum S.A. in 2014.

During my studies, I completed two internships; one in LARCO General Mining and Metallurgical Co (Evia, Greece) as a Mining Engineer, and one in Hellenic Petroleum S.A. as a Business Analyst. After completing my MSc, I have worked as an International Trade Consultant, focusing on trade with Singapore, and as a Petroleum Governance Assistant on the EI Source Book, with focus on issues of transparency and accountability.

Being in the middle of a new Iranian project, I am very interested in governance challenges and how these can be turned into opportunities to benefit the EI sector in its entirety.

Burma (also known as Myanmar) is well known for its wealth of natural resources, such as gemstones, industrial minerals, oil, and natural gas reserves. Sadly, and in common with a number of resource-rich economies, Burma remains one of the least developed countries in the world. The EI Source Book contains and links to a wealth of documentation and research relating to the highly contested concept of a “resource curse” (the links are to example publications). This is a malady that appears to afflict Burma.

Central to the concept of a “resource curse” is the paradox of combined natural resource wealth and widespread poverty and/or corruption, crime, imbalanced economic development and low growth rates.  As such, Burma contrasts strongly with other resource-rich countries that appear to have built long-term and inclusive economic development on the foundations of their natural resource wealth; oft-cited examples therein are Norway, Ghana and Botswana. There is also an expanding literature regarding how countries may reverse the curse, i.e. seek to emulate countries such as Botswana.


Weak institutions

Burma’s legal and institutional framework has created the perfect environment for those involved to become richer, while citizens struggle to survive on a day-to-day basis. As they are not bound to, most companies operating in Burma refuse to reveal information about their operations or their beneficial ownership. Transparency is widely absent, including from Government contracts. Revenues from exports of natural gas are reported to never reach Burma, despite gas providing the largest source of income to the country. The Government budget management is characterised by opacity and an absence of obvious or evident fiduciary oversight, contributing to fiscal volatility and state ineffectiveness.

 

Corruption and Poor country performance

To make matters worse, Burma ranks last on the Resource Governance Index 2013, performing poorly on all components involved (institutional and legal setting, reporting prices, safeguards and quality controls, and enabling environment). Corruption has been present for many decades, with Burma having one of the lowest scores on the Corruption Perception Index. Although revenues from exports are very large, local communities have not seen these benefits to any substantial degree. Natural resource revenues transit through several state-owned companies, utilizing opaque and non-transparent accounting procedures and arrangements; hence, funds that had the potential to improve citizens’ quality of life has been distributed among elitist groups and their powerful connections.

 

Armed Conflict and Human Rights

The country has one of the largest armed forces in the region. The secrecy over revenue management and distribution has funded military groups for many years. These groups have been accused of abusing human rights of civilians. While the vast majority of the population is stricken by poverty, Burma’s military leaders have spent billions of natural gas revenues on acquiring fighter jets, weapons, armored personnel carriers, tanks, fighter jets, and attack helicopters in the last three decades.

 

The next step forward

In the past few years, Burma has launched reforms to increase transparency and openness. State budget management remains opaque and the amount of auditing power of MPs is still unclear, as the majority of Parliament consists of military or military-backed personnel. The newly elected (December 2015) National League for Democracy though, has committed to work towards fairer revenue distribution. Such efforts, if successful, would increase opportunities for national inclusive prosperity and a general improvement of living conditions, a much needed relief to Burma’s citizenry after years of suffering.

Combined with its geopolitical position, Burma has the potential to become a powerful hub of economic activity in Southeast Asia. In order to facilitate this, the Government must, in my view, provide sound and responsible management systems to account for the use of resource revenue. Furthermore, promising to meet the minimum accountability requirements, Burma has been awarded Candidate status by the Extractive Industries Transparency Initiative (EITI), pledging to publicly disclose information about extractive industries revenues, Government accounts and licensing procedures. EITI should encourage Burma to comply with its principles and stress the advantages of doing so for the long term, and this development should surely be widely welcomed both for what it may presage for the future, should (presumed) good intentions translate into good deeds.

Recently (2015/6), economic growth has accelerated, and the economy is showing signs of stronger performance even in non-gas sectors, as the economy opens up. Perhaps Burma can indeed “reverse the curse”, but the jury on that is still out.


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