Letter to Parliament regarding the Timor-Leste Petroleum Fund Law

from Keryn Clark, Oxfam

to Parliament Commission C

1 Oxfam in Timor-Leste
P.O Box 152.
Jl. Balide, Matadouro
Dili, Timor-Leste
TEL : +670 3312605
FAX : +670 3321 792
Mobile: (+67) 723 0830
EMAIL: dili.admin@oxfam.org.tp

Sr Manuel Tilman,
Director of Committee “C”
Parlimento Nacional
República Democrática de Timor-Leste

31st May 2005

Dear Sr Manuel Tilman

REF: Oxfam Submission to Committee C on the Petroleum Fund Law.

Oxfam welcomes the opportunity to comment on the Timor-Leste Petroleum Fund Law submitted to Parliament for ratification. We recognise the Government of RDTL efforts to ensure that the Fund is managed and operated in an open and transparent fashion. Our submission to Committee C focuses on this aspect of the Petroleum Fund Law.

In February 2005, Oxfam provided a submission to the steering group which drafted the Petroleum Fund Law. We have attached this submission for your information. The Petroleum Fund Law has taken into account many of the recommendations in our February 2005 submission.  

Oxfam has noted the changes that have been made to the draft legislation aimed at increasing transparency mechanisms of the Petroleum Fund. However, Oxfam respectfully requests Committee C to consider the following recommendations in deliberations on the Petroleum Fund. We believe that these considerations will further strengthen the transparency and accountability of the Petroleum Fund. 

1.      Publications of payments made by oil and gas companies.

Recommendation 1: Companies publish details of their payments to the fund.

The Petroleum  Law (Article 35.3) requires that the independent auditor’s report shall state the aggregate amounts of payments made as Petroleum fund receipts for each payer for the fiscal year. Oxfam suggests that Petroleum Fund Legislation could also include a requirement that Petroleum Companies publicly provide details of their payments to the petroleum fund.

The rationale for a legal requirement for the petroleum companies to publish their payments to the fund, in addition to the independent auditors report is as follows:

2.Tranparency Mechanisms of the Petroleum Fund.

Recommendation 2. That the Petroleum Fund Law be amended to allow the Petroleum Fund Consultative Council (PFCC)  the power to initiate its own investigations.

The PFCC appears to primarily have an advisory role to Parliament as outlined in Article 25.2. It is not clear whether the PFCC has the power to initiate its own investigations or is restricted to providing advice. In order to clarify the role of the PFCC, the Petroleum Fund Law could clearly state that the PFCC has the power to initiate its own investigations “on any aspect of the operation or performance of the petroleum fund”. This wording is taken from Article 31.3 which requires the Minister and/or the Central Bank to furnish the PFCC with information.

Recommendation 3. That the Petroleum Fund Act be amended to require the independent auditor to also refer unaccounted discrepancies to the Petroleum Fund Consultative Council.

Under Article 35.4 if the independent Auditor concludes there is a discrepancy between payments made and those which should have been made, and which cannot be explained, the independent auditor shall refer the matter to the Minister. It would increase transparency if the legislation required the independent auditor to also refer this matter to the Petroleum Fund Consultative Council. An additional mechanism to promote transparency is any unaccounted discrepancies reported to the PFCC must be included in their reports which under Article 31.1 are required to be published by Parliament within 30 days.

Recommendation 4. That Article 32 of the Petroleum Fund Act be amended to contain a clause that provides for appeal in relation to cases where access to information has been denied on confidentiality grounds.

Recommendation 5. That Article 32 of the Petroleum Fund Act be amended to include a time period (e.g. 15 days) by which there must be a response by the relevant body to a request for information.

There is a possibility that a relevant body may delay providing information that is requested under Article 32.

Recommendation 6. That the Petroleum Fund Act be amended to increase the independence and transparency of the IAB.

Parliament could consider whether the proposed process for selection and appointment of the Investment Advisory Board (IAB) members provides sufficient independence and transparency of the IAB. Currently the IAB has five members, of which three persons are appointed by the Minister. In addition, it is not clear as to the role of the additional member appointed by the Minister under Article 17.1(d), nor the criteria on which the additional member will be appointed.

Recommendation 7. That Article 11.1 be amended as per Article 8.1 in the draft Petroleum Fund Legislation (Feb 2005) to increase accountability mechanisms.

The original draft Petroleum Fund Act (Feb 2005) included the following clause under Article 8.1 Government is responsible for the overall management of the Petroleum Fund. In the exercise of any management functions and competences entrusted thereto, the Minister shall be accountable before the Prime Minister, and they both shall be accountable before the Council of Ministers and before Parliament". This article has been amended in the current Petroleum Fund Law, Article 11.1 to read Government is responsible for the overall management of the Petroleum Fund”.

3.      Public Access to Information

Recommendation 8: That the Petroleum Fund Law be amended to require that reports are available in four languages: Portuguese, Tetum, English and Indonesian in order that the information in reports be accessible to the population of Timor-Leste.

We thank you for the opportunity to provide a submission on the Petroleum Fund Law and hope that our recommendations provide useful input into the process of approving this important legislation.

If you have any queries on the submission please do not hesitate to contact Keryn Clark by email on kerync@oxfam.org.tp or by phone on 723 0830.

Yours sincerely,

Keryn Clark
Timor-Leste Program Manager
Oxfam Australia

Enc. Submission to Steering Group on Draft Petroleum Fund Law for Timor-Leste, February 2005


[1] This submission is made by Oxfam Australia, Oxfam Hong Kong and Oxfam Great Britain, members of the Oxfam International network with offices in Timor-Leste.