East Africa gets legal support on resources
By STEVE MBOGO Special Correspondent
Posted Saturday, February 8 2014 at 18:45
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.
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 AfDB's 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 country's 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.
http://www.theeastafrican.co.ke/news/East-Africa-gets-legal-support-on-resources/-/2558/2198054/-/ipcx37/-/index.html
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